Sebi probes MFs-brokers nexus

MUMBAI: Sebi has started investigating whether MFs have been in cahoots with brokers to jack up the prices of illiquid B2 stocks. Sources said several medium-sized private sector fund houses are allegedly involved in these deals. These transactions provide finance to brokers to jack up stock prices, they said.
Sebi officials were unavailable for comment.Sebi chairman GN Bajpai had recently stated that the regulator is monitoring the current market rally and tracking unusual market movements.
Sources said, the illegal nexus pans out in the following fashion: Promoter groups and their brokers persuade one or more fund houses to buy heavily into an illiquid B2 stock. When the price rallies, gullible retail investors join the action and take the stock to higher levels.
Such moves are usually made by unscrupulous promoters who want to jack up their stock price and then offload their holdings during of a bull run for profit. Retail investors bid to rake in quick moolah ends in financial disaster.