R R Chokhani Stock Brokers, a private limited company headed by Ramakant Chokhani, was engaged in arbitrage between the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The Securities and Exchange Board of India (SEBI) made it mandatory to obtain insurance coverage. So the broker took a policy of Rs 1 crore through New India Assurance, and renewed it each year. The policy included "fidelity" coverage.
The broker had engaged Nilesh Patel as a key permanent employee to be in-charge of the entire arbitrage operations, including back office work, and preparation of trade data and reports. In view of
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