While the Supreme Court hears a set of pleas challenging Aadhaar’s validity and the questions raised about privacy, Vakrangee Ltd, the largest enrolment agency for UIDAI and claims to have carried out over 50 million Aadhaar enrolments, has come under Securities Exchange Board of India’s (SEBI) investigation for alleged price and volume manipulation of its own scrip at Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
According to documents available with Mumbai Mirror, the trading of the Vakrangee scrip was analysed by both the exchanges from January 1, 2016, to June 30, 2016, and September 1, 2016, to June 15, 2017, after it was suspected that certain entities were trading the scrip and increasing its market gross.
An NSE analysis report of trading of Vakrangee scrip between January 1and June 30, 2016, showed that a group of 22 clients related to each other as well as to the company were continuously buying and selling the scrip, accounting for 74.87 per cent of market gross on certain days. They traded the scrip on 123 days, and 18 of the 22 had more than 90 per cent trading activity in this scrip only, the report said.
The report pointed to the links between various client companies and its directors with Vakrangee. For example, Dinesh Nandwana, a director in Vajrangee Ltd, is also a director in Garnet International Ltd. He was a former director of another client, Ashtvakra IT Solutions Ltd, which is related to Ashtvakra Properties Pvt Ltd through common director Ashok Kumar Gautam, who is also one of the directors in Vakrangee.
Another client Vinod Kumar Bohra is a former director in Ashtvakra Properties, Mahavishal Printing Solutions and Cybernetix Automation etc. These acts violated the provisions of Prevention of Fraudulent and Unfair trade Practices Regulations. “In view of the aforesaid trading activity, SEBI may like to examine or question the clients or its directors on their source of income/funds and their rationale for trading in this scrip,” said the report that was forwarded to SEBI on July 11, 2016.
Documents show that BSE and NSE had forwarded two reports on trading in the scrip of Vakrangee containing analysis of trading during September 4, 2015, and June 30, 2016. SEBI’s investigation department had taken up the matter to see if any violation was done under provisions of SEBI Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair trade Practices relating to Securities Market) Regulations, 2003.
BSE report had observed that a group of connected entities like Cyberntix Group had contributed to the volume of the scrip during this period. Documents show that synchronized trades (where the buy and sell order quantity and rate were identical and orders of these transactions were placed with time gap of one minute) were conducted by suspected entities on BSE and NSE and its volume was 12.34 per cent and 1.97 per cent of total market volume during the investigation period. However, the SEBI concluded “no adverse inference is drawn” and recommended that the investigation “may not pursue this matter any further”.
Spokespersons of SEBI and NSE refused to comment on internal investigations and their outcomes. An email sent to SEBI chairperson and spokesperson also went unanswered.
Aditya Jani, Deputy General Manager (Finance & Investor Relations), Vakrangee Limited said, “We haven’t received any official communication and are not aware of any such investigation carried out by BSE, NSE and SEBI. The rumours on the unfair trade practices or inter-related entities trading seem to be untrue and baseless without any factual information.”
Jani further contended that Vakrangee was a “well-respected company with robust corporate governance policies” with six independent directors, including former executive director of SEBI Ramesh Joshi. He said India’s largest insurance player LIC India had a 6.58 per cent stake in the company, and it had reputed foreign investors like Wellington, New World Fund and had received licences from UIDAI, RBI.