Mumbai, April 7: After Ahmedabad, the Securities and Exchange Board of India (Sebi) has dissolved the board of the Pune Stock Exchange.
Objecting to the “general functioning and lapses in administration of the Pune exchange”, Sebi appointed B. D. Banerjee as the administrator of the exchange to exercise all the powers of the governing board.
Sebi came to this conclusion after investigating the exchange’s dubious role in the listing and price rigging of shares of Sanjay Aggarwal’s Home Trade. The regulator issued the order under Section 11 of the Securities Contracts (Regulation) Act, 1956.
“During the investigation into the listing and price rise of Home Trade’s securities and the annual inspection of the exchange and its subsidiary by Sebi, it was observed that the general functioning and administration of the Pune exchange was not carried out in accordance with the rules,” Sebi said. The governing board had taken charge on September 29, 2001.
The investigation revealed that the listing permission granted by the Pune exchange to Home Trade (formerly Euro-Asian Securities) was not in accordance with Sebi’s rules and listing agreement.
Sebi feels the errant exchange did not conduct any inspection of brokers or take any risk containment measures such as imposing special margins, putting the scrip on spot basis, suspension of trading in the scrip, indefinite suspension to curb/ check the artificial price rise.
There were large-scale violations in the stock watch system in the surveillance areas of the exchange. “In the subsidiary, the sub-broker terminals were activated before getting Sebi’s registration,” the order said.
The serious omissions had forced Sebi to issue a notice to the board of the Pune Exchange as to why it should not be superseded.
Sebi was constrained to adopt immediate measures to ensure the safety and integrity of the stock exchange and to ensure that transactions on the Pune Stock Exchange are carried out according to the regulatory framework and the interest of investors was not jeopardised further.
Sebi heard Pune bourse’s case on September 16, 2002. However, the exchange could not rectify or address the issues.