Some little-known brokers have come under the scanner of SEBI for suspected manipulative activities in stocks by spreading rumours about certain listed companies, including a few mid-cap entities whose share prices fell like nine-pins last week.

The regulator is now looking into the possibility of these brokers, whose trading activities have not been material in the past, being used as front entities by some foreign investors, HNI financiers and even company promoters.

According to sources, SEBI’s preliminary investigations into the last week’s sharp plunge in some mid-cap stocks have thrown forward certain interesting facts. It may also be rumours to beat down the stocks.

However, the regulator has yet not completely discarded the possibility of stocks having plunged due to large-scale sale by financiers having provided funds to promoters or other investors in lieu of pledged shares, as also exit of certain Mauritius-based funds.

Sources said that it was also possible that some Participatory Note holders might have directed the FIIs to offload their shares immediately, as such investments are already under scanner for possible re-routing of black money from India back into the country through locations like Mauritius.

However, there are some common threads in almost all the affected stocks and these include certain speculations doing the rounds about their businesses, promoters and foreign fund raising plans, sources said.

The regulator has yet not been able to establish any link between the brokers and major clients having dealt in these stocks, but most of the suspected transactions in these shares have been conducted through relatively smaller brokers.

Soon after these stocks were battered down on Thursday, the market regulator had swung into action, while the two stock exchanges, NSE and BSE, next day decided to reduce the price bands of the six affected stocks to five per cent on surveillance concerns.

These stocks are Parsvnath Developers, Tulip Telecom and Era Infra Engineering, Glodyne Technoserve, Radico Khaitan and Pipavav Defence & Offshore Engineering Company, all of which witnessed sharp plunge in their share prices on Thursday.

On Friday also, Parsvnath, Pipavav Defence and Glodyne Technoserve plunged by up to 20 per cent, although Tulip, Radico Khaitan and Era Infra managed to move up.

On Thursday itself, SEBI and the two stock exchanges had begun seeking clarifications from major brokers and clients having dealt in these stocks, while the regulator started inspecting data in its market surveillance system to identify the unusual trades.

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