As the Satyam Computer Services [Get Quote] saga was unfolding on January 7, neither the Securities and Exchange Board of India nor any of the Indian stock exchanges decided to suspend trading in the company's shares that fell by almost 80 per cent by the end of the day, wiping out billions of rupees worth of investor money.
Records show that more than 18 crore (180 million) shares were sold on the Bombay Stock Exchange and the National Stock Exchange on January 7. Most of the bulk holders of the Satyam scrip dumped the stock, preferring to bail out following the admission of a massive fraud by the Satyam chairman B Ramalinga Raju. It was the small investor who was mostly left holding the bucket.
The fraud committed by Raju is one of the darkest chapters in India's corporate history. But even after Raju confessed to the fraud in a letter sent to the stock market regulator and to the bourses, the authorities did not come to the aid of the retail investor.
This was a serious blow to the accountability and monitoring mechanism of the Indian financial system, and now the lack of action by the authorities must now be brought under the scanner.
Bharatiya Janata Party leader and Investors' Greivance Forum chief Kirit Somaiya has meanwhile filed a criminal complaint against Satyam and demanded that all transactions that have been conducted (after Raju admitted the fraud committed by him) must be reversed today (Friday, Jan 9) before 3 p.m. on the stock exchanges.
According to a reputed share broker of the Bombay Stock Exchange, "As many as 18 crore shares were sold at around Rs 60 to Rs 100 per share. Who sold these shares? Why did they sell those shares in bulk? These are important questions that need to be answered. It is imperative that not a single Satyam share traded on January 7 should be allowed to be sqaured off until authorities -- like Sebi -- find out the truth behind the desperate selling bout. Even after receiving the letter why was Sebi and the BSE sleeping over the issue?"
He said small investors must be saved by stopping the payment (against the shares sold on January 7). "It is the common man who bought these shares from mutual funds and big sellers. If the BSE stops the payment right now it will not affect the financial standing of the fund managers too much, but small investors' money will be saved."
The demand to reverse all the trades that happened in te Satyam share on January 7 has thus gained ground.
Satyam share price in January 2008 was Rs 541. In January 2009, it was around Rs 188. Since the share was available cheap many small investors bought Satyam even on January 7. The price of the share on January 9 had fallen to Rs 11.50 on the BSE and Rs 6.50 of te NSE in early trade.
Attached here is the list of all the mutual funds/banks who offloaded huge amount of shares in December 2008 and on January 7, 2009. Somaiya pointed out that this 'suspicious selling of Satyam shares needs be urgently inquired into.
A group of BSE brokers want the management of the BSE and other exchanges to stop the payment of Satyam shares that were traded on Friday. The deadline for the payment is at 3 pm today.