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Rediff.com  » Business » Two corporate houses under lens

Two corporate houses under lens

By BS Bureaus in Mumbai
February 27, 2004 08:45 IST
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The high-level committee on capital markets put under scanner the alleged role of two corporate houses and two foreign brokerages said to be "fronting for these corporate houses" in the recent crash in PSU stock prices.

One of the brokerages' merchant banking division is involved in lead managing one of the public issues while one of the corporate houses has become a prominent player in the market in recent months.

The Securities and Exchange Board of India told the committee it would look into the role of these entities in pulling the stockmarket down.

In a two-hour meeting at the Reserve Bank of India headquarters in Mumbai, the committee conducted a detailed post mortem of the recent stockmarket developments though this was not on the agenda.

The finance ministry was out in full strength, with as many as three officials, finance secretary DC Gupta, financial sector secretary NS Sisodia and joint secretary (capital markets) UK Sinha, attending.

Apart from the three regulators, the RBI, Sebi and the Insurance Regulatory and Development Authority, there were two special invitees from Sebi, wholetime director TM Nagarajan and executive director Pratip Kar.

The committee has asked the RBI to scrutinise the trading pattern of foreign institutional investors in the past week to see whether they are involved in any way with the stockmarket fall.

Sebi has commenced investigations into the developments from February 19, 2004, with special emphasis on the trading patterns of FIIs and affiliated brokerages, apart from the merchant bankers who are lead managing the issues coming into the market.

Sebi sources indicated that most brokerages attached to merchant banking outfits had a number of FII clients.

Sebi Chairman G N Bajpai told reporters after the meeting that the market regulator was monitoring the situation but refused to say whether it was worried. "We are on high alert," he said.
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