The Telegraph
Since 1st March, 1999
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Brokers block CSE accounts

Calcutta, Nov. 21: Brokers blocked Calcutta Stock Exchange’s (CSE) accounts for fiscal 2001-02 at the annual general meeting today, despite persuasion from the management of the bourse.

Brokers are the shareholders of the exchange. They said they would not give their approval to the annual accounts till the bourse’s settlement guarantee fund (SGF) and general reserve were audited.

The exchange has already started a special audit of the SGF and the general reserve. The brokers gave the management three months to complete the special audit and seek their approval.

The exchange had to dip into its SGF and general reserve in March last year to meet the payment shortfall of Rs 120 crore. The crisis cost the exchange close to Rs 25 crore, which has to be shared equally by some 600-odd members.

“It comes to Rs 4 lakh each,” said P. K. Sarkar, executive director of the exchange, but the brokers refused to accept the ballpark estimate. “The reserves must be audited, and we must get a clear picture of our losses,” they said.

The brokers and the management of the exchange are not looking eye to eye on this issue since August. The board of directors — including the broker-directors — discussed the accounts over and over again before finalising it.

A committee of three broker-directors had also been formed to examine the accounts, but it later said it did not receive the necessary documents from the authorities to carry out the scrutiny.

At the meeting today, the brokers asked the management of the exchange to initiate legal proceedings against the directors on the CSE board at the time of the payment crisis for “unauthorised withdrawal of funds” from the exchange’s reserves.

The brokers have convened an extra-ordinary general meeting, to be held within the next one-and-a-half months, to appoint a seven-member committee to take the “errant directors” to task.

The brokers feel the exchange should have distanced itself from the defaulters, and not funded their shady deals out of its reserves. They also said the then president of CSE, Kamal Parekh, had assured them through a notice that the withdrawals from the SGF and other reserves would not affect them.

The ruckus over the accounts forced the management of the exchange to postpone its annual general meeting last Thursday by a week. Over the last seven days, the authorities seem to have learnt a number of things. They did not call in the police again to guard the meeting, nor did they keep the media out of it.

Vice-president Shyamal Sen chaired the meeting today in the absence of Supriyo Gupta, the CSE president. The exchange could not reappoint its auditors since the accounts had not been passed.

Sultan Osman and Shankarlal Agarwal were elected as new broker-directors, while Rajendra Bhaiya was re-elected. There are six other brokers on the CSE board. Election was held for only three.

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