Ajay Kayan Let Off The Hook

The Securities and Exchange Board of India (Sebi) has let off the Ajay Kayan group of entities in its third report to the Joint Parliamentary Committee probing the stock market scam.

Kayan was alleged to be one of the major bear operators in the stock market scam which broke out a day after finance minister Yashwant Sinha presented his Budget on February 28 this year.

In its second interim report to the joint parliamentary committee probing the scam, the regulator has found that the Ajay Kayan group was not a defaulter in any settlement on any of the exchanges.

Sebi is, however, separately examining the role of the group in the price movement in the DSQ Software and ACC scrips.

The preliminary investigation of Sebi had said that the Kayan group had entered into transactions with Credit Suisse First Boston which were in the nature of financing transactions. In the course of investigations, it has, however, found that they did not have an impact on the fall of the market.

The regulator has, however, not ruled out the possibility of these transactions being financing transactions.

Sebi has said that the trading pattern of the Kayan group of entities did not indicate any trend and design to create an artificial price fall in the market post Budget.

The total transactions of these entities are not significant enough to have caused a fail in the prices in the scrips of Global Tele-Systems Ltd (now GTL), Himachal Futuristic Communications Ltd, Infosys Technologies Ltd, ITC, Reliance Industries, Satyam Computer Services, Wipro and Zee Telefilms during January-March 2001, it said.

The regulator has found that Powerflow Holding, one of Kayan's clients, is a group company of DSQ Industries.

One of Kayan's broking entities had sold large quantity of DSQ Software shares on March 2, 2001, a day after the Budget, on behalf of Powerflow Holdings and Maya Tradelinks which could have impacted the fall in the prices of the scrip.

Sebi's examination has, however, not revealed any short sale.

The entities had sold large chunk of shares either by carrying forward from previous settlement or from the existing holding, it said.