Sebi slaps 5-year ban on Samir Arora

Samir Arora, former star fund manager of Alliance Capital Mutual Fund and the poster boy of the Indian mutual fund industry, won’t be a...

Samir Arora, former star fund manager of Alliance Capital Mutual Fund and the poster boy of the Indian mutual fund industry, won’t be able to deal in stocks for the next five years.

In its order announced on Thursday, SebiK said it has debarred Arora from dealing in securities directly or indirectly for five years for insider trading, misconduct and violation of law.

This suspension includes the period Arora has undergone with respect to Sebi’s interim order passed in August 2003. Thus, Arora will be barred from dealing in securities till July 2008.

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Sebi has, however, allowed Arora to sell the securities held by him, if any, with prior permission from the regulator. The Sebi order comes into force with immediate effect. A source close to Arora told IE, ‘‘We are studying the Sebi order. We have the highest faith in the judicial system. We will invoke appropriate remedies. Ultimately, the rule of law will prevail.’’

Sebi member T.M. Nagarajan, in his order, said, ‘‘Arora, the fund manager of Alliance Capital Mutual Fund, was a key functionary and is guilty of misconduct and violation of law and primarily responsible for the commissions and omissions of ACMF and its AMC.

Therefore, action against him is required in order to protect the interest of investors and ensure safety, integrity and orderly development of the securities market, besides action against the ACMF and its AMC which Sebi has already initiated under the applicable rules and regulations.’’

Sebi said Arora’s actions were responsible for the fall in valuations of the Indian arm of US-based Alliance Mutual Fund. When Alliance decided to sell its stake in the Indian arm, Arora was also one of the contenders. It said it observed there were no transactions in the scrip of Digital Globalsoft by the funds under Arora’s management from April 11, 2003 to May 7, 2003 but he suddenly became very aggressive in disposing off the entire holdings of 14.66 lakhs shares held by the funds under his management in 4 consecutive trading days commencing from May 8, 2003.

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‘‘That the funds managed by Arora did begin selling the shares of Digital which were held by them suddenly and inexplicably after a gap of about one month compared to the earlier transaction in the scrip and immediately after the submission of the valuation report by BSM does raise queries regarding what prompted Arora to offload these shares,’’ Sebi said.