The Securities and Exchange Board of India (Sebi) has reprimanded the executive director of Bhubaneswar Stock Exchange (BhSE) for delay to act on its directions regarding certainirregularities in the bourse.
In a letter to the BhSE executive director Jay Sadany, a senior officer of the secondary market department of Sebi, Medha Dev has pointed out that the market regulator has taken a serious view of the delay in taking action on the sebi directions issued on January 29.
The January missive of Sebi sent by its deputy general manager, secondary market department, D Ravikumar, had directed the BhSE management council to initiate criminal proceedings against the members who had defaulted in repayment of loans taken from the members' welfare trust of the bourse.
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The market regulator had also asked the BhSE council to form a committee of non-elected directors to enquire into the veracity of complaints against the executive director regarding his alleged trading activities and non-compliance of procedure in granting of loans from the members welfare trust.
The directions were based on the findings of a preliminary enquiry conducted by the Sebi's Kolkata office in October last year into allegation of financial irregularities in the bourse.
The irregularities pertained to siphoning of BhSE members's welfare trust fund to the tune of Rs 1.5 crore by a few "influential" brokers and officebearers of the bourse.
The BhSE executive director, Jay Sadany, had signed the cheques transferring funds from the BhSE kitty to the members's welfare trust which had finally sanctioned money to this "select" group of brokers.
A substantial part of the money amounting to Rs 40 lakh had later been appropriated by a share trading firm, India Finance Guarantee Ltd (IFGL) owned by former president of the bourse T D Bhayana and vice-presidentAK Sardana.
Sebi had also sought immediate reconstitution of members welfare trust by reserving majority of trustee posts for the non-elected directors.
He had directed that the trust should stop grant of loans till reconstituion of trustee board. The Sebi letter said no member having outstanding loan from the members' welfare trust fund, including former president Manoj Thacker, vice-president Babulal Sharma and treasurer Anjani Kumar Singh should be allowed to act as office bearer of the exchange or trustees of the trust.
It had asked the BhSE council to take immediate legal steps to recover the outstanding loans and interest from the members and ensure that the defaulting members were not permitted to trade in the bourse.
Despite instructions that the BhSE council should take up the Sebi letter for discussion in its meeting and immediately comply with the directions contained in it, the council which has met thrice since January 29, has not taken any decision on the matter.
Though the proposal to set up a committee to probe the misdeeds of the BhSE executive director was the first agenda in the last council meeting held on March 1, it was passed over and not taken into consideration despite objections from nominee director M N Ray and secretary of the bourse Sanjay Mohapatra.
The Sebi official Medha Dev has further pointed out that the reply of the BhSe executive director on February 8, about action taken on the Sebi missive is "not satisfactory".
"You have not addressed all the issues. You are advised to place the letter in the meeting and report action taken by you in this regard to Sebi," Dev's letter to the execcutive director said.
"Sebi has taken a serious note in delay in taking action. You are advised to inform the reason ofdealy," the letter said.