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SEBI asks BSE chief to quit in price rigging case; court dismisses Parekh's plea

The Securities and Exchange Board of India has asked the Bombay Stock Exchange president J C Parekh to resign and has disallowed him from being a member of BSE governing board for the next three years in connection with the price manipulation in BPL, Sterlite and Videocon scrips.

The regulatory board is likely to take action against the BSE executive director R C Mathur after the completion of proceedings against him, the SEBI executive director Dharmishta Rawal said.

Rawal said that Parekh has been held responsible for his role in fixing margins and failure in monitoring the price manipulation in the BPL and Videocon scrips which resulted in artifical boom in the market.

Parekh and Mathur of the BSE, however, were not available for comments.

The Bombay Stock Exchange was volatile on rumours of Parekh's resignation. The Sensex crashed 75 points.

In November 1998, the then BSE vice-president Rajendra Banthia had to resign both as VP and from the governing board in a price rigging case that involved 18 brokerage houses, including his own Harvest Securities.

Meanwhile, a division bench of the Bombay High Court, comprising Justices N J Pandya and S S Parkar, have dismissed a writ petition filed by Parekh challenging the SEBI's order and seeking stay to the SEBI's order.

However, Parekh has been permitted to continue as president till March 31, 1999 in order to enable him to prefer an appeal before the Appellate Authority of the Central government, if he so desires. Parekh informed the BSE governing board that he will indeed appeal against the order to the AA for a stay pending disposal of his appeal.

The high court has prohibited Parekh from discharging any duties as a president and also prohibited him from attending the governing board meetings.

In the wake of payment crisis in June 1998 on the BSE and the NSE and allegations of manipulation in the scrips of BPL, Videocon and Sterlite, investigations were conducted by the SEBI.

The capital market regulator has also prohibited 18 stockbrokers comprising 12 from the BSE including the then BSE vice-president Rajendra Banthia and six brokers from NSE for their alleged involvement in price manipulation in the said scrips.

The SEBI also investigated functioning of the exchange and their office-bearers and pursuant to these investigations, a show-cause notice dated February 10, 1999 was issued to R C Mathur (executive director), R K Banthia (ex-vice president) and J C Parekh (BSE President).

The show-cause notice issued to the president was for his role in influencing the exchange administration and getting selected brokers, for not keeping the governing board fully informed.

In a media statement, the BSE said it is yet to receive a copy of the order from the SEBI. The governing board will therefore take a view on the future course of action on receipt of the copy of the order.

'I'm innocent. I'll fight back' -- The J C Parekh interview

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