Search the Internet          Tips  Sites: Finance, Investment

Rathi not involved in insider trading: Sebi

The Securities and Exchange Board of India has cleared the former Bombay Stock Exchange president Anand Rathi from his alleged involvement in insider trading and fraudulent and unfair trade practices.

The Sebi inquiry officer in a final show cause notice-cum recommendation sent to Anand Rathi last Friday stated that, "It is not clear whether any trading was done by Rathi on the basis of information obtained by him and, therefore, it cannot be said with certainty that the said trading by him and his companies had been done on the basis of said information.''

However, the Sebi officer held guilty three of his companies namely, Anand Rathi Securities Pvt Ltd, Rathi Global Finance Ltd, and Rathi Capital and Securities Ltd for violation of code of conduct under stock brokers regulations for being entities in which the former BSE chief is a director.

Sebi also recommended a penalty of suspension for a period of nine months with retrospective effect from March 12, 2001 against these companies.

The inquiry officer also recommended that the former BSE chief be restrained under section 11 and 11b of SEBI Act 1992, from being associated with any of the capital market related institutions for a period of two years.

Rathi was charged by Sebi for his alleged involvement in insider trading based on his conversation with the officer in surveillance department of the exchange during the market hours to seek certain price sensitive information.

In the case of the alleged violation of prohibition of fraudulent and unfair trade practices by his firms, the show cause clearly states that there is inadequate material to show that the particular information was used for any trading by Rathi or his companies.

The show cause further stated that the preliminary investigation could not establish that he had used the information, which he sought from the surveillance department for artificially depressing or increasing the prices of the scrips.

However, the Sebi inquiry officer still found the former BSE chief guilty of violating the code of conduct under stock broker regulations.

The inquiry officer has stated that the instance of Rathi seeking price sensitive information from the surveillance department has eroded the confidence of investors in the fair, transparent and impartial working of the exchange, in particular and securities market in general.

However, Sebi gave clear chit to one of his firms, Navratan Capital and Securities Pvt Ltd, by saying that Navratan is under the control of the Gupta family and not under Rathi family and, therefore, question of any penalty does not arise.

Sebi had given three weeks to Rathi for his submissions on this final show cause notice. The capital market regulator is likely to hear Rathi and his firms before announcing its final decision in his case, sources said.

UNI

YOU MAY ALSO WANT TO READ:
Rathi to challenge Sebi show-cause notice
The Capital Market Crisis
Money
Business News

Tell us what you think of this report