Arora: Wings clipped

Mumbai, April 1: The Securities and Exchange Board of India (Sebi) has directed Samir Arora, former fund manager of Alliance Capital Mutual Fund (ACMF), to stay away from capital markets ‘directly and indirectly’ for five years.

Arora was found guilty of violating the Sebi rules governing the Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market.

“I hereby prohibit Samir C. Arora not to buy, sell or deal in securities, in any manner, directly or indirectly, for five years,” said T. M. Nagarajan, a whole-time member of Sebi.

“We have the highest faith in the judicial system. We will invoke appropriate remedies. Ultimately, the rule of law will prevail,” Arora’s lawyers said.

The Securities Appellate Tribunal had imposed a March 31 deadline for the apex market regulator to decide on Arora’s case.

The prohibition period already undergone by Arora due to the interim order of August 9, 2003 will be included in the five-year bar. However, if Arora wants to sell some securities in this period, he may do so only with prior written permission from Sebi, Nagarajan said.

Alliance Capital, the US-based parent company, had decided to sell its stake in its Indian subsidiary. It was made known that Arora and his research team would exit from it.

ACMF immediately faced redemption pressures and the assets under management (AUM) of Alliance Capital Asset Management (India) (ACAML) had fallen by around Rs 1000 crore.

Prices of certain shares such as Balaji Telefilms, United Phosphorous, Hinduja TMT, Digital Globalsoft and Mastek fluctuated substantially due to rumours and uncertainty about the stake sale of ACAML.

Later, in a release issued on February 3, 2003, the US parent said they had completed the review of a strategic alternative for ACAML and they would retain their ownership in ACMF.

Following the decision, the share prices of the companies bounced back. The sudden turn of events and the influence it had on the stock markets made Sebi probe into the affairs of ACAML. An investigation was launched on June 6, 2003.

The probe conducted till August 9 revealed that Arora was taking all investment decisions regarding the equity and balanced schemes of ACMF and was also managing the Indian allocation of the Asian funds of ACM, besides those of some other Asian countries.