Chasing Crooked Shadows ; Promoters Swear On the Governance Bible, Investment Banks Point to Their Tall Chinese Walls, and the Regulator Plays Its Fiddle Even As Freakish Spurts in Stock Prices Prior to a Company Making a Transaction Announcement Become Increasingly Common. Is Rampant Insider Trading Indian Markets' Dirty Little Secret?

Summary

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June 1, 2005: the stock of Adlabs Films, a production to processing entertainment major, is quoting at a modest Rs 162 on the National Stock Exchange (NSE). In 10 days, the price creeps up to a little under Rs 190, with trading volumes galloping 19 times. By June 29, Adlabs is on a high, crossing the Rs 200 mark. On the last day of the month, Anil Ambani's Reliance Capital sends notices to the stock exchanges, informing them about a decision to acquire a 51 per cent stake in the entertainment company. The Adlabs stock by then has gone crazy, up to Rs 241 on the day of the announcement.

Point to note: The Adlabs scrip rocketed 49 per cent between June 1 and 30; the Nifty crawled just 6.37 per cent in the same period.

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Chasing Crooked Shadows ; Promoters Swear On the Governance Bible, Investment Banks Point to Their Tall Chinese Walls, and the Regulator Plays Its Fiddle Even As Freakish Spurts in Stock Prices Prior to a Company Making a Transaction Announcement Become Increasingly Common. Is Rampant Insider Trading Indian Markets' Dirty Little Secret?

July 11, 2005: The stock of VSNL, the Tatas' communications solutions provider, is quoting at a modest Rs 278 on the National Stock Exchange. By July 20, the price creeps up to a little over Rs 360. Five days on, the Tatas announce an acquisition of the Bermuda- based Teleglobe International Holdings for Rs 1,000 crore. The VSNL stock has, of course, gone delirious by then, almost kissing Rs 400 in intra-day trading on that day.

Point to note: The VSNL scrip rocketed 4...

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