Pse Broker Suspended Over Default

The Pune Stock Exchange (PSE) council of management has decided to suspend its broker-member Sameer Jani from trading following his failure to fulfill the pay-in settlement.

Jani is the third broker to go bust on the Pune Stock Exchange in a span of 5 months.

Jani's dues are to the tune of Rs 1.45 lakh. A top Pune Stock Exchange official said that Jani had been given a 20-day notice to settle his dues or else the exchange would not hesitate to declare him a defaulter.

In another move, the bourse's council of management has decided to serve a legal notice on Mangal Jain, the Pune Stock Exchange broker who has been absconding since the last one year, asking him as to why he should not be declared a defaulter. At least a dozen brokers and corporates who have been lending money to Jain have lost out and the total losses are pegged at around Rs 15 crore.

 

Fearing action from the Securities and Exchange Board of India, most Pune Stock Exchange brokers preferred not to file a complaint when Jain suddenly disappeared in May last year after most of the deals were dubbed as illegal badla and off-the-floor transactions. Interestingly, some Pune Stock Exchange brokers have now filed claims against Jain for bad delivery of shares valued at around Rs 50,000. An arbitration award was passed against Jain for the non-rectification of the bad deliveries. Based on this award, the PSE hopes to declare the errant broker a defaulter.

However, Jain never conducted these transactions from his own terminal. Before he fled, Jain used several brokers' terminals to heavily speculate in the market.

He has not left any evidence of owing any money to the stock brokers. Badla financiers were the major sufferers as Jain had borrowed heavily by pledging shares of the Delhi-based finance company Lead Financial Services..

Jain was also allegedly involved in rigging the prices of Lead Financial on the Pune Stock Exchange. The Rs 10 scrip of Lead Financial touched Rs 110 at one stage.

This rise is said to have helped Jain to borrow money by pledging shares.When the Lead Financial scrip plummeted to below its face value, Jain, who had placed huge orders, refused to take delivery.

All the shares speculated by Jain were traded on various terminals of the PSE brokers except his own. Thus none of the brokers could legally make any claim.

However, the brokers who have burnt their money in the Mangal Jain episode, particularly the badla financiers, have been putting pressure on the bourse management to initiate action against the missing broker.

The brokers have also filed a police complaint against Jain but to no avail. According to some of them, Jain is hiding somewhere in Mumbai and the police are reluctant to arrest him owing to Jain's clout.Earlier in February, the PSE had declared Sujatha Raman as a defaulter following her failure to settle around Rs 40 lakh in arbitration awards.

Jani is the third broker to go bust on the Pune Stock Exchange in a span of five months