'Dabba trading' racket busted in Vadodara, 2 held

Vadodara police have busted a racket allegedly running the illegal 'dabba trading' in foreign currencies with the arrest of two persons, a top officer said here today.
The duo, identified as Prathamesh Pandya and Gunjan Patil, were working as a manager and an employee, respectively, for a company called XDirect, and were arrested on Wednesday, Vadodara city police commissioner E Radhakrishna told PTI today.
They were arrested from the company's office located in Manubhai Tower at Sayajigunj area of Vadodara.
XDirect is registered in Mauritius and its India headquarters is based in Mumbai.
The illegal activity of Dabba trading is also conducted in equities and currencies.

'Dabba' means box and a dabba operator, in stock market terminology, is the one who indulges in dabba trading. The dabba operator's office is like any other broker's office having terminals linked to the stock exchange showing market rates of stocks.

Unlike the main market trade, which now happens online, dabba trading takes place in office, and since it leaves no record, except in the book of the illegal operator, both the buyers and sellers better their margins as they can easily evade any regulatory tax.
As dabba trading is not done on any recognised exchange platform, it is beyond the reach of taxmen or regulators.

Radhakrishna said that a local court has remanded both Pandya and Patil in judicial custody.
He said a team of CID will soon travel to Mumbai, as the company's main office is located there.
The company's Mumbai office, based at suburban Goregaon, could not be contacted as the phone number given is out of order.
The market watchdog, Sebi could not be immediately contacted.
"Initial information suggests that XDirect, which is registered in Mauritius, has been running the illegal business in the city since February 2014," the police commissioner added.
He said this could be the first such instance of illegal trade in foreign currencies being reported from Gujarat.

The duo were booked for cheating under relevant sections
of the Security Exchange Act and also under IT Act.
"We are also trying to find out if there is any violation of any other relevant rules/laws of the Sebi/RBI/income tax department besides cyber crime," Radhakrishna said.
He said the company prima facie facilitated trading of foreign exchange without taking any permission from Sebi and Reserve Bank.
Radhakrishna said the police today sent a fax message to the markets watchdog, Sebi on the development.
"XDirect's modus operandi was to lure customers to deposit a sum of Rs 35,000 following which they were given access to a software called 'MT4' specially designed to trade in foreign currencies.

"The customers would be allowed to trade according to the amount of money they deposited and they were promised quick returns in short time. The company takes a commission from the volume of trade as also from the customer," he added.
Gujarat CID inspector Rahul Patel told