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Sebi finds no irregularities in pool a/cs

Rakesh P Sharma

The Securities and Exchange Board of India in its report to the Joint Parliamentary Committee has said that its investigation did not find any misuse of pool account by brokers.

The markets regulator, which had conducted alleged misuse of pool account by brokers has not come across any instance of misuse of the account.

It also said that depositories have not received any complaints from clients in this regard. Pool accounts are clearing member accounts where all shares are lodged before transferring to the beneficiary account.

The Sebi inspection team also observed that the depositories have not thus far come across any instance of misuse of the pool accounts by brokers.

Sebi had earlier launched probe into several brokers including Nirmal Bang, CSFB, JM Morgan, First Global, to ascertain whether any misuse of pool account had taken place.

It also sought information from depositories on pool account balances of 20 brokers in respect of K10 scrips. It found that pool account balances of these brokers have decreased significantly in the month of April 2001 compared to their holdings in January and February 2001.

It found that Shailesh Shah group appeared among the top ten brokers holdings securities in the pool account of Cyberspace, DSQ Software, Global Tele, HFCL, Pentamedia Graphics, Rolta, Satyam, Silverline, SSI, Zee during the various period between January and April 2001.

CSFB appeared among the top ten brokers holding securities in pool ac-count of DSQ Biotech (January), HFCL (February), Satyam (April and SSI (March). The Nirmal Bang group entities was among the top ten brokers holding securities in the pool account of Silverline January, SSI (January) and Zee Telefilms (February).

However, the report said that it expects a few instances where there were delays in transfer of securities from the account to the clients.

Sebi's probe had found that in some sale transactions the securities sold have been credited by a third party, other than the seller. The shares in such cases were mostly delivered by clients of sub-brokers, associate concerns or persons related to the seller.

The report said since this an in-coming transaction, it does not amount to misuse of pool account balances. It was also found that brokers had delivered securities from the account to the beneficiary account of the broker.

However, non-payment of funds by client was cited as the reason for such transfers, which is permitted under the byelaws of stock exchanges.

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