The Telegraph
Since 1st March, 1999
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Sebi justifies judgement on Arora, widens probe

Mumbai, Sept. 24: Confirming the interim order against Samir Arora, the Securities and Exchange Board of India (Sebi) today brought into focus the lack of an arms’ length relationship between various Alliance group firms.

Expanding the scope of the investigations, the regulator will now look at the role played by the trustees and other directors on the board of the mutual fund.

“The action on the part of Alliance Capital, however, will not mitigate the need to go into the issue of accountability of the board of directors and trustees. After the conclusion of the investigation, appropriate actions shall be taken against them for any violation of Sebi Act and the regulations provided therein,” Sebi said.

Sebi reiterated its stand when it said there was an “extreme urgency” to pass an ex-parte interim order against Arora, the former fund manager of Alliance Capital Asset Management. The interim measure was aimed at safeguarding the interests of investors, apart from protecting the safety and integrity of the market.

Sebi said it was wrong to contend that shares held by Alliance were only for purposes of investment and, hence, out of the purview of regulations governing takeovers.

“It is observed that the Alliance Capital Asset Management and Alliance Capital Mutual failed in maintaining arms’ length relationship in managing their investments and making proper disclosures under the Sebi (Substantial Acquisition of shares and Takeovers) Regulations, 1997 and Sebi (Prohibition of Insider Trading) Regulations, 1992,” Sebi had said in its interim order.

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