23 september 2005

government clarifies probe restricted to penny stocks
new delhi: the ministry of finance has clarified that ongoing investigations into unusual price movements of shares was limited to a handful of `penny stocks' and was not investigating any broking entity or non-banking financial company (nbfc) for devious market behaviour.

"individual investigations are on. but the government has no such list of nbfcs and brokers," the joint secretary, capital markets, u.k. sinha, said at a briefing to clear misgivings in the minds of market participants.

it is understood that the securities and exchange board of india (sebi) are looking into trading pattern of around 50 penny stocks. he confirmed that the income-tax department had raided the offices of five brokers and that it was based on "specific intelligence reports that were developed over a period of time and were planned much in advance."

meanwhile, the central board of direct taxes (cbdt) too has clarified that searches in gujarat were part of normal investigation carried out by the i-t department. "there is no basis for drawing any speculative conclusions from the searches carried out," cbdt has said in a release.