LOC Against Mumbai's Big Investment Banker?
A look out corner (LOC) notice has been issued against one of Mumbai's leading investment bankers, who started as a equity broker. The LOC was issued at the behest of Mumbai police and economic offence wing that has been investigating several fraud related cases of the investment banker cum broker, who also has wealth management and asset reconstruction business. The banker has been facing a flak and being scrutinized mainly for scams in his asset reconstruction business and the Reserve Bank of India (RBI) has imposed many restrictions too. It is learned that the banker had managed to escape to USA few weeks before the LOC was issued. Is he back?
Clarification: The above market grapevine does not pertain to either Edelweiss Financial Services Limited or Mr. Rashesh Shah, Chairman and Managing Director of Edelweiss Financial Services Limited. Edelweiss Financial Services Limited has also clarified there is no LOC against Mr. Rashesh Shah, Chairman & Managing Director, Edelweiss Financial Services Limited.
Sale At BSE
BSE's iconic BSE Institute Ltd is up for sale. It has run certified courses in business management and stock markets for several thousands of students. But that is not the story. Earlier this year, after the BSE sold its part software business, a whistleblower had written to market regulator SEBI stating how procedures were not followed by the exchange in sale of its strategic business to a private company. Through the letter, the whistleblower had sought an inquiry into the dealings, since SEBI rules require board, regulatory and shareholder approvals for such sale. BSE had sold its software including CLASS Back Office software along with complementary products like Citru, Spark, and Class DP also encompassing key employees of BSE Technologies, who were part of integral development and support of the software business, to RTV Tech Systems, a wholly owned subsidiary of Rupeeseed Technology. The sale value was a measly Rs 5 crores while the whistleblower had alleged it could have got the BSE tens of crores had the exchange followed a competitive bidding procedure.
The whistleblower had told Sebi even by most conservative Price-to-earnings (PE) estimates (considering a PE of 10), the valuation of BSE Technologies (that housed the above business that was sold) could have likely gone up to Rs 200 crore. Sebi is not likely to have acted on the whistleblower letter but this time the BSE issued newspaper advertisements inviting bids for the sale of BSE Institute.
BSE Training Institute is more like a skill development institution. At a time when the government wants leading institutions to be at the forefront of its flagship skill development program in the country and even Sebi runs a training institute like NISM, BSE selling its own priced educational institutional. Strangely Sebi had asked the stock exchanges to sell their training institutes. It would be interesting to see if any little known private player becomes the new owner of the BSE Institute or some reputed educational institute comes in? There are more questions in this context: How many students' future is at stake? Lats quarter, the BSE institute gave approximately Rs 17 crores in dividend to BSE and this quarter too a higher dividend is expected. Are all the reserves of BSE Institute being taken out ahead of the sale? Meanwhile, the website of BSE Institutes has not been working and the interested parties would find it tedious to dig deeper into the value that it offered.
Conflict Of Interest?
Korn Ferry International, a US-based executive headhunting firm, was recruited by Multi Commodity Exchange (MCX) recently to find a suitable candidate to fill the vacancy of MD and CEO at the exchange. Among two names suggested by the headhunter for the top post, one was Praveena Rai, the Chief Operating Officer of National Payments Corporation of India (NPCI). How can Sebi and MCX not know that Korn Ferry International was also a headhunter for NPCI and worked with the organization closely on recruitment of senior people there? Fact that Korn Ferry was working with NPCI has been in the news media. The same headhunter is now suggesting senior executives from NPCI for appointment at MCX. Is it not a conflict? Rai has also worked with Kotak Mahindra Bank, the largest institutional shareholder of of MCX.
Why Defunct OTC Exchange Requires Scrutiny
OTC Exchange Of India, also known as the Over-the-Counter Exchange of India, is a Mumbai based exchange that is now defunct but has huge real-estate asset. It is under the ownership of Ministry of Finance and was the first exchange for small companies, as well as the first screen-based nationwide stock exchange in India. On July 10, OTC Exchange issued advertisement with regard to sale of 6240 square feet office space at Maker Towers, Cuff Parade for Rs 23.4 crores. Sources say, the office space being sold is much larger than what has been declared in the advertisement. Wait there is more to the story. OTC also had a full building at Uppar Govind Nagar, Malad East, a distant suburb in Mumbai. Nobody knows what happened to the building and eight flats that OTC owned there. OTC Exchange was founded in 1990s and derecognized by SEBI via an order in 2015 but years before it filed for liquidation, the exchange had collected several crores from brokers as membership deposit. The exchange did not return that deposit to the brokers despite have no business ever. Instead, OTCI issued recovery notices to its members for annual fee despite being dormant and adjusted the brokers money against annual fee dues. There should be full scale investigations against bureaucrats and executives who profited from this scam.
Mole In Regulatory Organisations
Recently Sebi conducted raids at some of the leading stock markets punters and operators as its probe showed that they were indulging in front running and had prior knowledge of all the regulatory actions against certain banks and NBFCs. These traders who were raided by SEBI are said to short the stocks of banks and NBFCs ahead of the information of the regulatory action against them came into the public domain. Sebi is forgetting that more than the traders, their concern should be to weed out the moles in regulatory organizations like RBI and itself (if any) from where the news and information about the regulatory actions travels to these traders before it is out in the public domain. Otherwise, the raids are futile. By the way, after some of the raids in 2023, Sebi did not come out with any order and the matter got buried.
