Panel upholds Sebi order on Parekh

The Appellate Authority in the Finance Ministry today upheld the order of the Securities and Exchange Board of India (Sebi) dismissing J C Parekh as president of the Bombay Stock Exchange (BSE). "The authority dismissed Parekh’s appeal against Sebi order," special secretary (insurance) B K Chaturvedi, who heads the authority, told newsmen here. The appellate authority in its 28 page order said the allegations against Parekh were fairly serious in nature and "we are not inclined to accept the view that since the payment crisis was finally resolved, the action taken by the BSE president was justified." Sebi had on March 24 asked Parekh to relinquish his post as BSE president and had made him ineligible to hold any public position in future as a member of the governing board or the office bearer of the exchange for a period of three years. Parekh was asked to step down after investigations by Sebi into the payment crisis at the BSE and allegations of price rigging in three scrips -Sterlite, BPL and Videocon International – in May last year revealed that the BSE president exceeded his powers to open the stock exchange after trading hours to enter transactions. "There was a complete lack of transparency on this issue (opening stock exchange beyond trading hours and entering transactions). We are unable to accept why these developments were not reported to the board immediately," the panel said. The appellate authority comprising Chaturvedi and Arvind Virmani, senior economic advisor in finance ministry, said the enquiry by Sebi revealed that a number of BSE brokers, who had taken huge positions in certain scrips, were attached to one client, which could be traced to Harshad Mehta. The order said Parekh directed these operations be done even subsequent to the BSE board meeting and had not taken its permission to continue the practice, which was clearly in violation of the norms. Moreover, vital information relating to the broking concern in which BSE vice president was associatedwas also not given to the board. While the payment crisis was developing, the exchange reduced the margins instead of increasing it leading to large positions in certain scrips, the order said. “Further, the margins were taken in the form of shares of companies in which large positions had developed instead of shares of some other companies,” it said. Parekh had approached the appellate authority challenging the Sebi order. Parekh mum on panel order MUMBAI Former president of Bombay Stock Exchange (BSE) J C Parekh tonight declined to comment on the Appellate Authority’s decision upholding the order of the Securities and Exchange Board of India (SEBI) dismissing him. Parekh, when contacted, said “it is difficult for me to comment unless I go through the Appellate Authority’s order.” The Mumbai high court on Thursday allowed the former BSE president to continue as director of the bourse until April 19. Parekh was asked to quit office by SEBI last month for his alleged role in rigging ofprices of three scrips, Sterlite, BPL and Videocon International.