Mumbai: Stock movements of the now defunct Global Trust Bank (GTB) on the bourses are baffling both investors and the regulators. The scrip has been seeing large trading activity despite the fact that it has lost its value after the bank's net worth turned negative due to unrecoverable non-performing assets.

Since the Reserve Bank of India (RBI) declared a moratorium on withdrawals on July 24 and announced the merger of GTB with the Delhi-based Oriental Bank of Commerce (OCB), over 15 per cent of the bank's equity has changed hands. The stock, which had crashed over 80 per cent from Rs14 levels to Rs2.5 since the moratorium was announced, is seeing huge volumes. Over 1 crore shares were changing hands daily in the last two weeks on the Bombay Stock Exchange and the National Stock Exchange.

The exchanges had earlier taken several steps to prevent stock manipulation, such as shifting the GTB stock to trade-to-trade category and reimposing the circuit filter on the scrip to prevent volatile trades.

The stock is also seeing volatile price movements. For instance on Monday, July 9, GTB hit the 20 per cent upper circuit at Rs3.13, while it fell sharply on Tuesday. Meanwhile the Securities and Exchange Board of India (SEBI) has launched full-fledged investigation into trading activities in the GTB stock.

The market regulator will also probe into the possibility of insider trading prior to the bank being placed under moratorium by the RBI on July 24. Sebi chairman G N Bajpai said, "We have been keeping a close watch and called for trading data from exchanges."

There were also criticism regarding Sebi chairman's decision to lift the ban on some tainted entities involved in manipulation of GTB, which was not made public.

However, Bajpai said that the information about the order on lifting the ban on certain

entities to trade in GTB stock was disseminated through the Bombay Stock Exchange (BSE).

Meanwhile, former MP and convenor of BJP Investors' Cell called for investigation into leaking of price sensitive information about the moratorium on GTB to major investor groups enabling them to exit the counter, offloading the worthless stock on unwary retail investors.

He said that there was a sharp increase in trading volumes on the GTB counter just before the moratorium was announced. Between July 19 and 22, about 68.27 lakh shares of GTB was traded on NSE, while 19.83 lakh shares had changed hands on BSE, where most of the large investors including domestic mutual funds and overseas corporate bodies had exited the counter.

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