Pendse arrested, barred from mkt

The police arrested former Tata Finance Managing Director Dilip Pendse yesterday even as the Securities and Exchange Board of India (Sebi) barred him from the securities market for six months, for alleged violations of insider trading regulations.

This ban is in connection with the alleged manipulation and insider trading in the shares of Tata Finance, in connivance with J E Talaulicar, chairman of Nishkalp Investments, a Tata Finance subsidiary, of which Pendse was a director.

The police arrested Pendse in New Delhi over charges of violating stock market guidelines and causing a loss of about Rs 9.5 crore to the Tatas. Pendse was today produced in a city court and remanded to police custody for seven days.

Sebi said its investigations had found that Talaulicar""who was also non-executive director of Tata Finance""along with his family members had on March 31, 2001, received Rs 69 lakh from one JIP Investment, a sub-broker of JHP Securities Pvt Ltd, a member of the Bombay Stock Exchange.

Further, Talaulicar had delivered 100,000 Tata Finance shares on April 4, 2001 to JIP Investment. It was found that Rs 69 lakh was the consideration for the sale of 100,000 shares of TFL at the rate of Rs 69 per share.

Subsequently, JIP Investment sold the shares in the market between May 18, 2001, and May 30, 2001, through JHP Securities and Prashant J Patel, a member of the National Stock Exchange (NSE) on behalf of Talaulicar and his family at a price of about Rs 34 per share. Sebi also observed that Talaulicar refunded Rs 34.79 lakh to JIP Investment, this being the difference in prices.

It was also noticed that NITCL had paid a sum of Rs 70 lakhs to JHP on March 30, 2001 and on the next day, an amount of Rs 69 lakhs was transferred by JHP to its sub-broker JIP, which, in turn paid the amount to Talaulicar and his family.

Copies of bills issued by JIP in favour of Talaulicar and his family for the sale of 1,00,000 shares of TFL at a price of Rs 69 per share were traced during the investigations. These documents along with the payments made by JIP to Talaulicar and family in March 2001 when the market price of Tata Finance shares was only about Rs 40, proved that insider trading regulations had been violated.