The Central Bureau of Investigation conducted raids at over two dozen places including those of senior officials of SBI Mutual Fund, Unit Trust of India and broker Ketan Parekh for allegedly duping the financial institutions of crores of rupees in the latest stock market scam.
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The officials and Parekh are accused of "off-market" and "insider" trading of shares of Padmini Technology Limited and Padmini Polymers Limited resulting in heavy losses to general public and financial institutions.
The raids, which began on Wednesday, were completed this morning and the CBI sleuths recovered several documents from the residence and offices of Ketan Parekh and the then managing director of SBI Mutual Funds Niyamatullah.
The raids were carried out at 11 places in Kolkata, 5 places in Mumbai and 11 places in the national capital, following registering of 3 fresh cases by the CBI's Bank Securities and Fraud Cell.
In the first FIR, the CBI has named 31 people including Parekh, Niyamatullah, the then executive president of SBI Mutual Funds P R R Upadhay; proprietor of Padmini Technology Limited Vivek Nagpal; chartered accountant Kailash Chander and others for allegedly entering into a criminal conspiracy and duping UTI of Rs 60.9 crore (Rs 609 million) by "insider" trading.
The FIR alleged that Parekh pledged 50 lakh (5 million) shares of Padmini Technology to SBI by "off-market" trading and when the financial institute went in for its trading, the shares were found much less than their face value of Rs 20 each.
The FIR named several fake companies floated by Ketan Parekh as well which were shown as promoters of the Padmini Technology shares.
These people were booked under various sections of the Indian Penal Code including criminal conspiracy and forgery as Parekh had allegedly submitted fake documents with the stock market regulator Securities and Exchange Board of India.
In another FIR, owner and director of Padmini Technology, Nagpal and V S Gupta, respectively and the then chairman of UTI P S Subramaniam were named for allegedly entering into a criminal conspiracy and duping the government-run mutual fund UTI of nearly Rs 9.85 crore (Rs 98.5 million).
Padmini Technology, which was earlier known as Padmini Polymers, had secured a loan from the UTI by keeping its debentures in the custody, in case the company defaulted in paying the penal interest of 16 per cent on the principle loan amount of Rs 8.65 crore (Rs 86.5 million).
However, when the company virtually defaulted in repaying its loan and interest, UTI decided to sell off the debentures only to find that the company had gone bust and its debenture value was much less than its face value of Rs 10.
In the third case registered by the CBI, the agency alleged that the Delhi-based Shonk Technology Limited entered into a criminal conspiracy with officials of financial institutes and committed criminal breach of trust to the general public.
This case was being investigated as certain documents were recovered from the office of the company and share brokers.