SEBI supersedes Magadh SE

MUMBAI, DEC 5: The Securities and Exchange Board of India (SEBI) has superseded the council of the Magadh Stock Exchange in Patna for a per...

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MUMBAI, DEC 5: The Securities and Exchange Board of India (SEBI) has superseded the council of the Magadh Stock Exchange in Patna for a period of one year with effect from December 8, 1997. S S Dhanoa, IAS (retired) has been appointed as an administrator to exercise and perform all the powers and duties of the council of the management.

Based on the inspection of the Magadh Stock Exchange Association conducted by SEBI and complaints from elected directors, public representative directors and SEBI nominee directors, irregularities and mismanagement were observed in the functioning of the stock exchange. There had been a break-down of internal administration of the exchange and the executive director had complained that due to constant threats he was not in a position to attend office and had to provide police protection at home.

The Council of Management of the MSE was issued a notice under Section 11 of the Securities Contracts (Regulations) Act, 1956 on October 8, 1997 asking to show cause why the Council of management of the exchange should not be superseded in view of the above instances of mismanagement and irregularities.

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According to SEBI, opportunity of personal hearing was given to the members of the council twice, but none of the members of the council appeared for personal hearing. “Based on the replies received from 8 out of the 13 council members, SEBI is convinced that the council of MSE has failed in ensuring proper governance and implementation of the provisions of the SC(R) Act, by-laws of the exchange and its directives,” Sebi said.

As a result of this the interest of broker members and investors was adversely affected. “Delay in pay out and closing out liability of members including the members of the council, huge unsettled bad delivery liability, break-down of internal administration, non-compliance of SEBI directives are all instances of mismanagement and non-functioning of the council,” it said. Therefore, it is felt essential that immediate measures are adopted in order to ensure the safety and integrity of the stock exchange and to ensure that the transactions are carried out as per the regulatory framework and that the investors’ interest are not adversely affected at any cost. SEBI has also suspended R K Gupta & Co, member of the Uttar Pradesh Exchange for three months with effect from December 15, 1997.