It seems like the whole corporate action in the capital markets is rigged, with the insider trading laws taken for a toss. Noted, three such cases in the recent past where insider trading or front running was clearly visible, and of course, people having the classified or so called privileged information made good money.
1. L&T Finance Holdings - The stock added to Futures and Options space, stock was moving up with a positive bias. The stock moved to 90 levels and suddenly cracked back to sub 75 levels. Later, in the evening management made a notification to issues shares via Offer for sale to some shareholders at a price of 70. Wow!!...people with classified information shorted the stock in F&O and gained. It's was a mere coincidence that the stock was added to F&O in the mid of the series, and prior to the announcement by L&T. Sounds, more than just a coincidence.
2. Axis Bank - Axis Bank stake sale was on the cards for some time. As per the newspaper reports, couple of buyers had the information on the price at which the block deal will be done. These buyers punched the order with a higher market price and thus, their order took precedence in the queue and they got the shares at a price meant to be sold to the institutional buyers. As per the reports, these buyers made over 100 crores in a span of 90 minutes.
3. Sun Pharma/Ranbaxy Deal - Ranbaxy stock was on the run couple of days before the deal actually announced. Stock moved from sub 390 levels to 450 levels in six trading sessions with high volumes. Clearly, some buyers had the information that this deal is coming and will be beneficial for Ranbaxy.
I don't know what SEBI is doing on all such cases and whether there are any plans to bring stronger laws on this, but it is clear that the laws are broken at will and even companies with good track and governance record failed to prevent this. The notion of markets being efficient is in doubt.
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