Sebi Begins Probe Into Fraud Deal Via Pool

The Securities and Exchange Board of India (Sebi) has commenced enquiries into the security lapse which occurred at the Bombay Stock Exchange (BSE) on November 19, wherein possibly a sub-broker or trader made an unauthorised transaction on behalf of broking firm SSKI.

Sebi executive director Pratip Kar confirmed that they had sought details from the BSE regarding the security lapse on the basis of a complaint filed by SSKI Securities, whose default password was used to log on to the trading system in the contingency pool. "We are looking at how and where the lapse occurred," he said. BSE in its turn has held back pay-out of the broker at the other end of the transaction.

According to information available, a sub-broker or trader entered the contingency pool on Monday morning just when trading was commencing for the day and logged onto the trading system. Trading through the contingency pool is allowed after seeking written permission from the concerned exchange authorities. However in this case the permission was neither obtained nor given.

A huge transaction for selling shares of a certain company was then entered through the terminal on behalf of the exchange member SSKI through this particular terminal with the shares being sold right up to the downward circuit limit. Barely ten minutes later, the trade was closed out by buying back the shares at the same trading terminal and losses of Rs 20 lakh was booked.

As per preliminary inquiries, the exchange has found that 85 per cent of the shares transacted had been matched by the trader at the terminal by getting into synchronised trades in tandem with a counterparty broker. Meanwhile SSKI Securities filed a complaint with both the BSE and Sebi saying that a security lapse had occurred and transactions were carried out on their trading ID unauthorisedly. BSE is also learnt to be looking into the matter.