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I-T raids on Ketan Parekh, Anand Rathi, 16 other BSE brokers

Priya Ganapati and Sidharth Shah in Bombay

Investigative agencies on Friday swooped down on as many as 18 brokers in Bombay, who were allegedly operating a bear cartel and jeopardising the healthy climate in the capital markets.

A top I-T official said that the offices of the brokers who were being searched include Ketan Parekh (NH Securities, Triumph), Radhakisan Damani, Nirmal Bang, First Global (Shankar Sharma), former BSE president Anand Rathi, and Rakesh Jhunjhunwala.

While Rathi denied to a television network that his premises were being searched, his son Amit declined to comment when he was contacted at one of the firms at the BSE, which were being searched. Meanwhile, interim BSE president Deena Mehta said: "There is no raid in my office." Earlier reports had said that her offices too had come under scrutiny.

"The searches commenced around 2 pm and will continue throughout the night," the official said.

The official said: "We have taken the assistance of CBI in case of any violation of law is noticed."

The officials said the investigation wing of the department, carrying out the searches, were going through the records of at least 16 entities belonging to these brokers.

Official sources confirmed that Income-Tax Department, Enforcement Directorate and the Department of Revenue Intelligence on brokers carried out the raids jointly.

The Intelligence Bureau, the Central Bureau of Investigation, and the Economic Intelligence Bureau are also said to be part of the sudden raids, sources said.

This led to further fall of share prices across-the-board at the Bombay Stock Exchange, the premier bourse of the country, pulling down the BSE sensitive index by 79 points.

The raid was a part of nationwide exercise by the Centre to identify the broking houses and their owners, who allegedly indulged in speculative activity, causing sharp volatility in the share prices.

Several innocent investors already burnt their fingers and incurred heavy losses due to the unusual movement of the prices, particularly after the budget.

Reports said that the investigators had identified 80 individuals and companies for a probe into the recent share price crash and to unearth the nexus between stock market operators, corporates and film industry involved in the rampant rigging.

The raids are likely to continue, sources said.

Though the officials are tight-lipped about the findings of the raids, the investigators after the day-long raids were busy in closed-door meeting refusing to take any phone calls.

Some of the officers, sources said, visited Bombay a fortnight ago and collected information on the operators.

This event comes after the crisis that has rocked the Indian capital market in the past few days. A BSE member said, "This was expected. It is only the timing of the event which is odd." An employee outside a leading broker's office said, "I went for lunch and could not enter my office."

A keen stock market observer opined: "A lot of water has flowed under the bridge since the Securities and Exchange Board of India (Sebi) and the BSE initiated moves to control the panic that has gripped the stock markets. These raids would have unearthed more evidence had they been conducted earlier."

Meanwhile, the Director-General of Income Tax was unavailable for comment.

Additional input: UNI & PTI

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