This refers to the Q&A with Venkat Chary, chairman and independent non-executive director of the Financial Techonologies (FTIL) "NSEL-FTIL merger proposal makes no sense, also sets a bad precedent" (November 7). Since National Spot Exchange Ltd (NSEL) is a 99.9 per cent subsidiary of FTIL, the parent company must own up for the wrongdoings of its subsidiary. Otherwise, any company will float subsidiaries in the belief that it can remain immune even if its subsidiary commits acts of fraud and dupes investors. Much is made of the high net worth investors in NSEL. Which statute says that if one cheats and defrauds high net worth investors, public interest is not involved? The argument that this will "scare away investors" is dubious.
FTIL, as the parent company, cannot absolve itself from the liabilities of NSEL. In fact, the Forward Markets Commission and government's actions have set the right precedent that no entity will go scot free if it commits acts of fraud. Once the merger happens, the company law board should intervene to supersede the FTIL board and direct that the cash in the company is disbursed among NSEL investors.
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FTIL, as the parent company, cannot absolve itself from the liabilities of NSEL. In fact, the Forward Markets Commission and government's actions have set the right precedent that no entity will go scot free if it commits acts of fraud. Once the merger happens, the company law board should intervene to supersede the FTIL board and direct that the cash in the company is disbursed among NSEL investors.
R L Sureka Kolkata
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number