No Scam, Sebi Chief Tells Jpc

The Securities and Exchange Board of India chairman D R Mehta has told the Joint Parliamentary Committee (JPC) that there has been no scam in the stock market.

Deposing before the JPC today Mehta made the surprising comment. He said while there have been irregularities and payments problems in the markets there has been no scam. But committee chairman S P M Tripathi said the members differed with Mehta on the issue. Tripathi said the opinion of the Sebi chairman was also different from what the market regulators interim report had itself pointed out.

Tripathi also said, "Parliament had felt that there was a scam in the share markets which is the reason why it had appointed the JPC to investigate it."

The Sebi chairman explained to the members that a scam should be defined as a situation where the markets have had to close down. But even at the height of the turmoil in the exchanges none of them had to be closed down. Instead there has been a self correcting mechanism in the bourses that has come into play when the problems arose. He said in Calcutta Stock Exchange, the procedure for regulating the payment cycles were weaker than in other exchanges because of which the problem arose.

According to Tripathi, the Sebi deposition is expected to help the JPC find out if the warning system in the bourses about potential trouble are adequate. He said the emphasis by the JPC will be in identifying the weaknesses in the regulatory system. The Sebi chairman told JPC that a committee on uniform settlement for all exchanges appointed by the regulator in 1997 has yet to give its report.