See my comments on the page of news in Financial Express.
Shah D J
On Sunday, 23 August 2015 10:10 AM, "Ramachandran Mahadevan ramachandran.mahadevan@gmail.com [ICAI_CIRC_MEERUT_CA]" <ICAI_CIRC_MEERUT_CA@yahoogroups.com> wrote:
lack money: SEBI busts 'innovative' scheme
PTI
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MUMBAI, AUG 23:
As it steps up its crackdown on tax evasion and laundering of black
money through stock markets, regulator SEBI has busted an 'innovative'
scheme wherein HNIs were incurring 'bogus losses' to offset tax
liabilities.
The probe, which has resulted in an interim ban on 59 entities,
including HNIs and their shell companies, found that more than half of
these individuals and firms showed notional losses totalling Rs.338.3
crore through trading in illiquid stock options.
At the same time, the remaining entities generated 'bogus profits' to
the tune of Rs. 406.9 crore, which were largely done to show
artificial increase in the networth of a private company or
individuals, the probe found.
The 'bogus losses' were also shown for the purpose of tax evasion by
offsetting the capital gains tax on business profits.
While a total of 34 entities showed having generated losses, the other
25 were found to be generating profits.
Further probe is continuing in the matter and the case has also been
referred to the Income Tax Department for necessary action at their
end.
SEBI has also referred the matter to the Financial Intelligence Unit
and the Enforcement Directorate for necessary action on their parts.
Under its stepped-up surveillance mechanism, the SEBI has come across
several instances and internal alerts wherein a set of entities were
consistently making loss by their trading in options on individual
stocks.
Trading of these entities appeared abnormal because they were
consistently seen making significant loss by their trades which were
reversed with the same counterparties either on the same day or the
next day.
In its interim order in the latest case, SEBI said its analysis of the
stock options segment of BSE for the fiscal 2014—15 showed that there
were several entities who consistently made significant loss and
others who consistently made significant profit by executing reversal
trades in stock options on the exchange.
In its probe, SEBI first identified the top entities making
significant loss or profit by buying and selling equal units of stock
options of a scrip.
It then checked whether trades happened at unreasonably low or high
price or they were out of sync with the underlying price. SEBI also
examined contribution of trades of the entities to total traded volume
in the contract on those days and identified the quantum of such
reversal transactions.
The entities which made a loss or profit of more than Rs. 5 crore in
the stock option segment on account of reversal transactions were
shortlisted.
It was found that the loss—making entities were trading mainly in
options on individual stocks which were thinly traded. The trades by
these loss—making entities, in many cases, contributed to 70-100 per
cent of total traded volume for the contracts on those days
--
CA Ramachandran Mahadevan,M.Com.,F.C.A.,
I-708,Mantri Tranquil,Subramanyapura Post,
Bangalore-560061
Karnataka,India.
+91 80 42011024
You never achieve success unless you like what you are doing."
--Dale Carnegie,
American self-help author and lecturer
__._,_.___
Posted by: Dipak Shah <djshah1944@yahoo.com>
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