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Unit Trust of India denies insider trading

The head of India's largest mutual fund, the Unit Trust of India (UTI), on Monday dismissed as baseless accusations it had engaged in insider trading.

A financial daily, in an unsourced report, earlier on Monday said the Ministry of Finance (MoF), in a letter marked "most immediate", had asked the Securities and Exchange Board of India (Sebi) to investigate "the involvement, if any, of the Unit Trust of India" in insider trading in Indian stocks.

"We have already clarified that the charges are baseless," Subramanyam told reporters on the sidelines of a business seminar in Madras.

The daily reported that the finance ministry had also asked Sebi to investigate allegations of insider trading in Himachal Futuristic Communications and Zee Telefilms.

The newspaper said UTI owns a 10-15 per cent stake in Himachal Futuristic Communications (HFC), a telecommunications equipment maker. It did not give a figure for UTI's stake in Zee Telefilms, the operator of India's largest private television network.

Both HFC and Zee were among the major stock holdings of Ketan Parekh, a broker arrested on Friday for alleged fraud. Indian stocks have fallen sharply the past two trading days due to the arrest of Parekh, known as the 'Bombay Bull' because of his ability to move the market through his huge investments in technology and media stocks.

UTI's Subramanyam said the stock market now urgently needed a crucial infusion of confidence to recover.

"We need to create a climate of confidence, that is absolutely essentially required and we need to avoid creating a climate of suspicion, which is not good for the market," he added.

UTI Bank, a private bank founded by UTI, figures prominently in a separate investigation.

Sebi is investigating allegations of insider trading in the shares of Global Trust Bank.

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