A share broker keeps complete knowledge about share market conditions. The directors of a company take his help to make a fresh issue of the proposed company. Later on, it was found that the share broker himself has brought a maximum number of shares of the company through unfair means with an objective of doing price rigging.

(i) Which market did the share broker work in and represented what possible institutions to make fresh issues for the company?

(ii) What are the unfair means undertaken by the share broker called? What does it mean?

(iii) Which regulatory body can protect investors and punish the share broker from this unfair means?

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Solution

(i) Sharebroker worked in the primary market. He would be representing a merchant bank, underwriter, etc.

(ii) The share broker was involved in insider trading. Insider trading is an illegal method of buying or selling a security by someone who has exclusive access to material or information about the security used to make an undue profit or reduce losses.

(iii) Securities Exchange Board of India (SEBI) can protect investors and punish the share broker from this unfair means.

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