Bse Cracks The Whip On Fictitious Badla Trades

Authorities at the Bombay Stock Exchange have annulled transactions carried out by broker Raman V Dalal, who was bailed out recently by the administration from a payment crisis.

The matter will be placed forward in the forthcoming meeting of the Disciplinary Action Committee .

Action will be taken against those who are involved in such fictitious transactions.

R C Mathur, executive director, Bombay Stock Exchange told Business Standard: The matter will certainly be discussed in the next meeting of the Disciplinary Action Committee and action will be taken against members if they are found guilty.

When asked if there were more such transactions, Mathur said: If there are more such transactions, I can assure you that they will be dealt with firmly. All the badla financiers will get a stern warning with this action. It reinforces the self-regulatory nature of our administration.

 

Transactions that have been annulled include a deal of 50,000 shares of Blue Chip Ltd worth Rs 22.50 lakh between Raman V Dalal and D P Nagardas, with Shailesh L Shah in 3,35,000 shares worth Rs 20.66 lakh in Tripex Overseas, with P R Shah in 27,000 shares worth Rs 12.15 lakh in Blue Chip, with S N Tara in 4 lakh shares worth Rs 23.94 crore of Tripex Overseas, with Deepak Mehra in 33,900 shares worth Rs 15.26 lakh in Blue Chip and with Deepak Mehra in 2 lakh shares worth Rs 12 lakh in Tripex Overseas.

The exchange authorities have discovered that a few members of the exchange have sold certain scrips on spot delivery basis to certain other members of the stock exchange and have collected the sale proceeds by cheques.

The buying members have, in turn, sold the same scrips to theselling members in the settlement.

The difference in the buying and the selling rate of these scrips represents the interest on funds lent is made by members who purchased these scrips on the spot delivery basis.

These are basically in the nature of funding or financing transactions whereby finance is given to the members outside the stock exchange system but the repayment of the funds lent is made through the settlement system of the stock exchange.

The exchange authorities have stated that these transactions are not considered genuine trade or commercial transactions between the members and will fall in the ambit of fictitious transactions.

The action has been taken under the purview of the Bye-law 357 (ii) and (iii) of the Rules, Bye-Laws and Regulations of the exchange which says that a member shall be deemed guilty of unbusinesslike conduct for any of the following or similar acts or omissions of fictitious dealings if he makes a fictitious transaction or gives an order for the purchase or sale of securities the execution of which would involve no change of ownership or executives such an order with knowledge of its character.