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SEBI may review nod for takeover of Dundee MF

Our Bureau

KOLKATA, Oct. 6

THE Securities and Exchange Board of India (SEBI) will consider the recent arrest of Mr Dinesh Jain, an executive of the Srei International group, by the police investigating the affairs of the Calcutta Stock Exchange, in the context of the approval granted to Srei's proposed takeover of Dundee MF.

Mr R.M. Joshi, ED of SEBI, told newspersons here that the securities regulator would look into the matter that has arisen because of the on-going police investigation.

"We had given an in-principle approval to the Srei-Dundee deal subject to the consent of unitholders,'' Mr Joshi said, adding that the arrest may yet emerge as an important factor.

For the regulator, the more significant issues relate to Mr Jain being the Managing Director of a subsidiary of Srei. The arrest, it is also pointed out, had happened after the in-principle okay was granted.

However, SEBI is quite aware that the police investigation into the affairs of CSE relates as far back as March 2001 and even earlier. Mr Joshi, who was in Kolkata on Saturday to inaugurate a seminar on insider trading regulations and the takeover code organised by the Institute of Company Secretaries of India, also came down heavily on the Calcutta Stock Exchange.

"This is not a happy situation for the exchange, which has come under bad light because of the recent upheavals,'' he said while speaking on market reforms, adding that "concerns are being expressed from all quarters because of the sort of transactions that are said to have taken place''.

Mr Joshi also charted out what he said was a roadmap for the Indian capital market. The future, he pointed out, would be marked by transition to a T+1 settlement cycle, announced by the Finance Minister and expected to happen in April 2004.

The other proposals include expansion of the product portfolio in the derivatives segment, increasing the level of corporate governance standards, implementing a better surveillance and enforcement system, activating the bond market further, and strengthening of associations like AMFI.

The authorities would also like to see the emergence of Indian Depository Receipts a la ADRs and GDRs. The monitoring functions of SEBI will have to be strengthened to meet the changing requirements of the market.

Further, the regulator wishes to bring about reforms to implement a system of digital signatures, for which it is in talks with the central bank.

"The creation of a market intelligence network is important for SEBI to spot cases of insider trading. The amended regulations should help stop insiders from misusing unpublished information to the detriment of genuine investors,'' he maintained.

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