SEBI lens on Ambani firms m-cap rise...scam in the making

The rise in the market capitalisation of both the Mukesh Ambani and Anil Ambani group of companies has caught the attention of the capital markets regulator.
The Securities and Exchange Board of India (SEBI) is checking whether there was a de facto market capitalisation race between the brothers and if this was the reason why shares of their companies rose vertically between March 2007 and January 2008.
The regulator is said to be scrutinising its Integrated Market Surveillance System (IMSS) data to check for signs of possible concerted moves to lift share prices of a number of companies belonging to the two groups.
These include Reliance Natural Resources and Reliance Communications from the Anil Ambani group, and Reliance Industrial Infrastructure and Reliance Industries belonging to the Mukesh Ambani group.
Attempts by DNA Money to contact SEBI chairman Chandrashekhar Bhave for a comment on this was not successful.
SEBI is said to be investigating whether there was a modus operandi to the whole thing.
It wants to lay out modalities so that in future small investors are not suckered into rallies that explode on their faces later.
A proposal put out by SEBI earlier on Tuesday to include derivatives under the purview of insider trading regulations is a step towards curbing such incidences in future.
Under the prevailing regulations, an insider is penalised for transactions done only in the cash market and not in the futures & options segment, leaving a huge loophole in insider trading laws.
The proposal, when passed, would go a long way to save small investors, which is the ultimate aim of the regulator SEBI.
At the height of the bull run and ahead of the jumbo public issue of Reliance Power, the Anil firm, the stock of Reliance Natural Resources galloped to Rs 249.7 on January 9, 2008, which is a 1027 per cent gain over the price of Rs 22.15 seen in March 2007.
The stock was also included in the futures & options segment on May 14, 2007.
Similarly, shares of others Anil-led companies �- Reliance Energy, climbed 454 per cent, Reliance Capital jumped up 400 per cent and Adlabs Films surged 382 per cent between March 2007 and January 2008.
On the Mukesh side, Reliance Industries shot up by 150 per cent to Rs 3,252 from Rs 1,299.4 last March, while Reliance Industrial Infrastructure rocketed 740.6 per cent to Rs 3202.25 in October 2007 from just Rs 380.95 in March 2007.
Value-wise, a 150 per cent rise in the share price of Reliance Industries would amount to a far greater surge in market cap than many of the Anil shares put together. Also, it has tremendous weightage in the Sensex, so can change sentiment.
Since mid-January, share prices of both the groups have plummeted and large tracts of wealth created wiped out in a flicker.