Now that the Securities Appellate Tribunal has upheld the regulator's view that Jermyn Capital is 'not a fit and proper' person in the context of India's capital market, it raises questions about the inaction by other regulators and investigation agencies. This column had first pointed out that a Google search for Dharmesh Doshi immediately throws up the Central Bureau of Investigation's (CBI) red corner notice against the former managing director of a Ketan Parekh-linked entity. This, in fact, triggered further action by Sebi. We also pointed out that the notice is shockingly incomplete and shows a lack of interest in pursuing the case. The SAT order is extremely important in this context. It officially confirms several facts reported by us - that Dharmesh Doshi's Indian passport has been revoked. That Sebi's suspicion that "Andrews (the majority owner of Jermyn capital, (Dharmesh) Doshi and Ketan Parekh are hand in glove with each other and for this reason none of them enjoys a good reputation in the context of the Indian securities market" is valid. And that it is a conclusion that "any prudent person" would have drawn in judging the "fit and proper" criteria.

CBI inaction

The irony is that although Dharmesh Doshi is effectively barred from the market, neither judicial orders nor court cases have stopped Ketan Parekh from amassing wealth during this bull run. On 14 July 2006 the SAT had upheld Sebi's order against him saying, "If Ketan Parekh and his entities are allowed to continue with their operations, they would pose a serious threat to the integrity of the securities market and endanger the interests of the investors." Yet, several courts as well as the elite CBI have stood by and watched him amass money in the present bull run and repay Rs 254 crore (through accelerated repayments) that he bilked out of Madhavpura Mercantile Cooperative Bank of Gujarat to stay out on bail and keep trading. This has happened while the commodity regulator and bourses were helplessly bleating about Ketan Parekh being 'active' in the commodities market. Importantly, the Finance Minister's Income Tax sleuths are too busy pouring over Annual Information Returns to go after law-abiding tax-payers to notice Rs 254 crore that Parekh earned and paid. And the CBI is busy going after bit players in Ketan's saga to pursue the central figure himself. These are officials of banks and mutual funds, who do not have the clout of a Ketan Parekh and Dharmesh Doshi to encourage the CBI to move at snail's pace with their investigation. Sebi, which has barred Ketan Parekh from the capital market for 14 years, has also not stirred itself to find out if his newly earned wealth is in contravention of its orders.

... contd.