Sebi Asks Custodian Not To Dispose Of Securities

Nemesis catching up with CRB capital markets

The Securities and Exchange Board of India yesterday swung into action against CRB Capital Markets after it received the interim report from Kalyaniwala Mistry. The report reveals irregularities committed by the CRB Mutual Fund. Mistry was appointed a few months ago to inspect the CRB Mutual Fund.

The capital market watchdog has asked IIT Corporate Services, which is the custodian of CRB Mutual Fund, not to dispose of any of the securities held in its custody on behalf of CRB Mutual Fund and submit inventories of the securities held in the portfolio of scheme of the Fund. The directive has been issued under Section 11B of the Sebi Act.

 

Brushing aside criticism that Sebi was not upto the mark while handling the CRB case, the Sebi chairman said: We have done everything possible within the purview of the Sebi Act. NBFCs are regulated by RBI. They also function as merchant bankers and are sponsors of AMCs. Sebi will look into the matter to the aspect of protecting the interest of unit-holders and shareholders.

The ban on launching any new schemes for nine months up to June 1996 imposed on CRB Mutual Fund is now being reimposed till further orders under section 11B of the Sebi Act. CRB has not launched any scheme after August 1994. A scheme for which offer document was recently filed with Sebi has also been prevented from being launched.

According to the Sebi chairman D R Mehta, the report was submitted to Sebi yesterday. He said: We are examining the findings of the report. The report indicates several irregularities in the functioning of CRB Mutual fund. We are looking into them.

This is the second time that Sebi has initiated inspection on the mutual fund. Sebi inspected CRB Mutual Fund through M P Chitale & Co in 1994-95. This led to the appointment of an enquiry officer on the basis of whose report Sebi asked CRB Mutual Fund not to launch any new schemes for nine months ending on June 30, 1996.

Sebi is also examining the legal implication of CRB Mutual Fund trustees not turning up for an emergency meeting. The trustees were either not available or had resigned.CRB Capital Markets, which is a category I merchant banker, has been prohibited from undertaking any activity under section 11B of the Sebi Act. The BOLT terminal of CRB Sharebroking Ltd has been closed by BSE.