The Telegraph
Since 1st March, 1999
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Cops close in on scam kingpins

Calcutta, Nov. 29: With the arrest of Ashok Kumar Poddar last night, all the key defaulters to Calcutta Stock Exchange (CSE) have been nabbed, and the police dragnet is now closing in on Ketan Parekh — the protagonist of the multi-crore securities scam busted in March 2001.

The police are also on the lookout for Dinesh Dalmia, the promoter-managing director of DSQ Software, for rigging stock prices in collusion with brokers. He is wanted for violation of foreign exchange regulations as well, and several notices sent to him by the Enforcement Directorate have been unanswered.

Poddar and Singhania (arrested earlier) were close associates of Parekh, and claim to have been duped by him. They say they had bought shares for Parekh, but he did not pay up. As a consequence, they could not fulfil their payment obligations to CSE.

Even the Securities and Exchange Board of India (Sebi) — the capital market regulator — had remarked in its report to the Joint Parliamentary Committee (JPC) probing the scam that Parekh was largely responsible for the payment crisis in Calcutta. Sources say Calcutta Police’s investigation of the scam is now set to go beyond the city.

“Calcutta Police’s investigation of the scam has the blessings of certain members of the parliamentary panel who want to teach the miscreants a lesson and set examples.

“It is going to be extended to brokers in Mumbai as well, but without the support of the Mumbai Police, it is impossible for us to succeed in our efforts,” said sources in Lalbazar — the city police headquarters.

But whether the city police’s action will help Calcutta Stock Exchange recover its dues from the defaulters is a moot point. They have made a combined offer of Rs 10 crore for settlement, but that has failed to please the exchange authorities. Negotiations are on between lawyers representing the defaulters and the exchange.

CSE officials called

Sebi has asked the executive director of CSE, P. K. Sarkar, to meet its officials in Mumbai early next month. The securities market regulator has asked the exchange’s chief executive to bring along all departmental heads.

Sebi has asked the exchange to indicate what actions have been taken by it to plug the loopholes in its systems that the payment crisis in March 2001 had revealed. The exchange’s surveillance and margin collection systems were found wanting.

The authorities claim to have addressed all the shortcomings. “There are no deficiencies in our surveillance and margin departments, and our trading platform is among the best in the country,” said a senior CSE official.

The bourse is going to pitch for introduction derivatives trading, and to obtain Sebi’s approval it must prove that its ability for hawk-eyed surveillance.

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