Ten CSE brokers declared defaulters

Ten CSE brokers declared defaulters
ENS ECONOMIC BUREAU

Kolkata/Mumbai, Mar 26: After dilly-dallying for almost a week, the governing board of the Calcutta Stock Exchange today declared ten of its members as defaulters and suspended them from membership of the bourse following their failure to meet pay-in obligations of about Rs 60 crore in three successive settlements.

The decision was taken after the exchange's sub-committee on defaulters, comprising SEBI nominee on CSE Board D N Rawal, public nominees V N Reddy, Shyamal Sen and CSE president and executive director at a meeting recommended that all the ten firms be declared defaulters and proceedings be initiated as per bye-laws of the exchange, a CSE release said. "We have recommended declaration of all the ten firms as defaulters," SEBI nominee Rawal told reporters after the meeting.

The sub-committee's recommendation was ratified by the full board of the exchange at a meeting later during the day, a CSE committee member said. Only a few public nominees and one of the committee members - Girish Mehta- were not present.

The ten members are: Harish Chandra Biyani, Biyani Securities (P) Ltd., Ashok Kumar Poddar, Prema Poddar, Raj Kumar Poddar, Ratan Lal Poddar, Dinesh Kumar Singhania and Co, DOE Jones Investments and Consultants Pvt Ltd, Arihant Exim Scrip Pvt Ltd, and Tripoli Consultancy Services Pvt Limited, the release said.

Sebi is still officially keeping silent about the actions being proposed against the Calcutta Stock Exchange in the wake of the payment crisis. The last payout was to the tune of Rs 229 crore and was completed after hectic deliberations and negotiations with all the parties.

Sebi officials pointed out that with the regulator in the picture, the exchange had withheld Rs 52 crore pay-outs for trades which it found to be ``prima facie'' collusive or dubious in nature. This involved 10 operators, five of whom had agreed to forego their amounts. Officials in the regulatory body confirmed that these trades were in the nature of ``one-two-three'' trades which are struck by the operators in collusion to square off outside positions using the system.

The corpus of CSE's SGF now stands at Rs 40 crore, including securities, as disclosed by the officials of the stock exchange at Kolkata. This now would need to be augmented and strengthened to prevent repeats of the crisis seen recently. There has also been internal debate on the options the regulator has before it to deal with CSE sternly, including supercession or keeping the broker-directors out of the board, but the top officials of Sebi are not willing to spell out any of the details just yet, until the tremors of the past few days subside over the coming days.

CSE brokers and investors had reportedly lost around Rs 1,000 crore in defaults in the illegal badla business. SEBI is yet to come out with any action to curb illegal badla business in Kolkata. Income Tax department had conducted "country-wide raids on offices premises of some brokers, believed to be behind the recent price-rigging which led to steep decline in the market, was planned, but postponed in Kolkata because of unavoidable circumstances."

Meanwhile, it was reported that CSE was forced to utilise its free reserves created over the past few years from its profits to clear the mess though officials denied any such move. A section of CSE employees were extremely vocal at the committee's reported move to utilise free reserves to bail out brokers and were even present during the press conference called on last Friday to hear what the authorities had to say on the issue.