INDIA BUSINESS WORLD - APRIL 1st - APRIL 15th - 2008
BSE BROKER KETAN PAREKH, 3 OTHERS GET ONE-YEAR RI
THE long arm the of law has finally caught up with former BSE brokers Ketan Parekh, Pallav Sheth, Hiten Dalal and Shrenik Jhaveri. All four have been sentenced to one year rigorous imprisonment by the special court trying the various cases related to the 1992 securities scam. They are alleged to have misappropriated Rs 47 crore belonging to Canfina, the then non-banking financial arm of Canara Bank.
The court has extended their bail till July 31, to enable them file appeals in the Supreme Court.
According to the chargesheet filed by the CBI, the four former brokers had arranged for bogus ready forward (RF) transactions between Canfina and Canbank Mutual Fund during October 1991 to January 1992. In a ready forward transaction between two parties A and B, party A sells securities to party B for a certain amount, and agrees to buy those securities back at a slightly higher price at a predecided date in the future.
However, the payment made by Canfina for the RF deal that never took place, found its way into to the accounts of brokers.
Canfina officials then fraudulently accounted for these transactions as squared off RF deals. Canbank Mutual Fund officials too made adjustments in their books to show that funds received from Canfina were returned to the latter. The case was filed against the bank officials as well as the brokers.
The funds were eventually returned to Canfina, but in the process the brokers had been able to utilise the funds for making payments in their own broking business. According to CBI, it was a case of misappropriation of bank funds that is an offence even if the funds were refunded to Canfina by the brokers.
Others who were sentenced for one year are Canfina vice-president MK Ashok Kumar and CBMF general manager BR Acharya. Canfina assistant vice-president S Mohan was sentenced for six months.
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