Sebi probes midcap crash

Stock exchange officials have summoned several brokers and investors as part of an investigation into Thursday's midcap mayhem.

According DNA newspaper citing sources, brokers who recorded high volumes in the shares that declined steeply, and investors with positions in the same stocks were among those summoned. Promoters  were not part of thoise summoned.

Several sources confirmed the National Stock Exchange had a word with some of the brokers and investors, while the BSE  is also believed to have conducted a similar exercise though this could not be confirmed.

The newspaper said spokespersons for both exchanges declined comment.

Many midcaps saw massive value erosion on Thursday which was blamed on margin calls, operators going bust and dumping of pledged shares by financiers.

Margin calls are triggered when a those trading shares on borrowed money exceed a certain level resulting in sell-offs if calls for additional collateral are not met. Promoters often pledge their shares to raise capital from financing companies.