(a) Whether the SEBI investigation into the
price rigging of BPL, Sterlite and Videocon has
showed that the promoters were involved with Harshad Mehta; and
(b) if so, the details thereof; and
(c) the action taken or proposed to be taken on
the basis of the findings of SEBI investigations?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI BALASAHEB VIKHE PATIL)
(a) to (c) : Investigations were undertaken by SEBI
in the wake of abnormal trading in the scrips of BPL,
Sterlite and Videocon during April-May 1998 and the
likelihood of sudden payment crisis at the two major
exchanges, BSE and NSE, in June 1998. Investigations prima
facie concluded that a set of stock brokers and
sub-brokers acting in concert on behalf of common
clients, cornered a large chunk of shares at BSE
and NSE. These set of clients were acting as a
front for Harshad Mehta. As a result of findings
of investigations, enquiry proceedings were initiated under
SEBI Regulations against 34 stock brokers and
orders were passed against 18 brokers, prohibiting them
from undertaking fresh activity as brokers till completion
of the enquiry proceedings. Show cause notices
were issued to the President, Vice President and
the Executive Director of BSE for their failure
to discharge their responsibilities and for their
conduct which was detrimental to the integrity
of the system. Show cause notice was also issued
to NSE for slackness in monitoring and
not taking effective surveillance action. Consequent
to findings of investigations and show cause
notices, SEBI has passed orders against the
President, BSE asking him to relinquish the
office of the President. SEBI had also directed that
the President and the Executive Director of
BSE shall not be eligible to hold any public
position in future as member of the governing
board as well as in capital market related
public institutions for a period of 3 years.
Proceedings against the Vice President of BSE
and the NSE are underway. Investigations had also
indicated that the companies BPL, Sterlite and
Videocon had connived with Harshad Mehta in
the price manipulation, following which show cause
notices have been issued to Harshad Mehta
and Directors of these companies. The
investigations also brought out certain systemic
deficiencies for which SEBI has taken appropriate steps.