SEBI to probe VSE MD's resignation

Market regulator has directed that Rao be allowed to continue as the managing director, the board members of VSE are in no mood to give in

The row over the 'forced' resignation of Vadodara Stock Exchange (VSE) managing director seems to have intensified with the securities market regulator initiating an inquiry into the allegedly forced resignation of the regional exchange's MD-G Someswara Rao.

While the Securities and Exchange Board of India (SEBI) has directed that Rao be allowed to continue as the managing director, the board members of VSE are in no mood to give in.

On October 7, Rao had tendered his resignation following the mounting pressure from the board of directors of VSE to resign voluntarily or face termination. The board of directors, thereby sent a copy of the resolution passed by the board of VSE to the regulator. Rao, later on, termed his resignation as 'forced one'.

Considering the gravity of the situation, SEBI on Tuesday, dashed off a letter to VSE putting the resolution passed by the board of directors in abeyance and sent two of its senior officials to inquire into the matter.

The officials today flew down to Vadodara and heard both the sides. When contacted, the officials refused to comment.

"The officials have come to inquire the matter and heard the arguments of both the sides," said Rao outside his office.

"The competent authority has decided to direct you (VSE board) to keep the resolution in abeyance. It has further been decided that Rao will continue as MD and will discharge all his duties in this capacity till further directions from SEBI," the letter from the market regulator stated.

"Any non-compliance of this direction would be viewed seriously," added the letter signed by GM, market regulation department of SEBI.

However, overruling the SEBI's letter, the board members had locked the chamber of MD for not allowing him to resume office.

"They (board of directors) have unnecessarily created the crisis. They have forced the MD to quit and also offered him a cheque of settlement. This is illogical especially when the board takes a'voluntary resignation' from the employee and in exchange offers settlement," Vishnubhai Patel, president, VSE Brokers' forum.

The inquiry was on till the late evening as trading members, who hold 47 per cent in the exchange along with the MD remained present at the VSE office. Three public interest directors and two shareholder directors remained present too.

"This management is not able to run the exchange. And if the board continues to operate autocratically and doesn't follow SEBI norms, then, we demand to supersede this board and appoint a new one," Patel said.