DCA to probe books of 94 companies
New Delhi: Department of Company Affairs has started inspection into the books of accounts of 94 companies following the findings of the Sebi report on the securities scam. The list of corporate entities being probed by DCA includes companies belonging to brokers like Ketan Parekh, Nirmal Bang, Shankar Sharma and Anand Rathi as also
HFCL, Nirma, Ranbaxy, Cyberspace, JM Morgan Stanley, CSFB, GTB, Global Tele, Zee, Amara Raja and Silverline.

In its report, Sebi has given details of how corporate houses, brokers and FIIs acted to manipulate the stock markets.

The DCA order that sought the records of the corporate entities on a priority basis, will give the investigative agencies access to the flow of funds of the companies to see if they complied with the rules.
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SEBI moots central monitoring authority
New Delhi: Sebi has suggested setting up of a central authority to monitor flow of funds into the market to prevent stock scams in future. In its 1500-page interim report on the securities scam, Sebi said establishment of such monitoring authority would insulate the securities market from the vagaries of indiscriminate funding.

It said every person and entity participating in the securities market should be monitored by the central authority by allotting 'unique client code' on the lines of security number of the US or electoral identity number.

Such a central authority could be set up after the parliament passes the money laundering bill.

At present, there is no regulation or monitoring of flow of funds in and out of the securities market and this was a major contributor to stock market upheavals.

The report said brokers should be required to disclose the source of their own, borrowed and client funds to the central authority for trading in excess of a certain limit of say Rs five crore in a month or Rs 20 crore in a year. This requirement should be made applicable to clients as well.

It said submission of annual audited accounts by every person or entity participating in the stock market for gross turnover in excess of certain limit, say Rs 5 crore a month or Rs 20 crore a year, be made mandatory.

Sebi also suggested changes in the policy for sub-accounts of foreign institutional investors (FII) as investigations of trading pattern revealed that these entities might have been used for parking of shares and creation of an artificial market.
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Sebi wants OCBs out of markets
New Delhi: Sebi has recommended a ban on investments by overseas corporate bodies (OCB) in the domestic capital markets. The recommendation follows evidence of large-scale irregularities in their dealings.

At present, OCBs owned directly or indirectly upto the extent of at least 60 per cent by NRIs or persons of Indian origin are allowed to invest in shares/convertible debentures of Indian companies under the portfolio investment scheme through a registered broker on a recognised stock exchange.

Sebi has suggested that the sub-accounts of foreign institutional investors (FIIs) be asked to report all their participatory note transactions to it on a regular basis.

It has also suggested a slew of measures to prevent circumvention of rules and regulations by corporate houses through flotation of a complicated web of investment companies.

Sebi has recommended that a parent company should not be allowed to have more than one investment company even, while acknowledging that a company should have the right to set up any number of subsidiary or associate companies or partnerships for manufacturing and trading activity.

"The funds given by the corporate houses to the front companies (investment companies) for various purposes are often in reality used for stock market operations'' the SEBI report noted.
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