Sebi Warns It May Supersede BhSE Council

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Bhubaneswar, October 25:: Vexed with the functioning of the Council of Management of the Bhubaneswar Stock Exchange (BhSE), market watchdog Securities & Exchange Board of India (Sebi) has threatened to supersede the management of the Bhubaneswar bourse.

In a significant development early this week, Sebi has asked the Council of Management of BhSE to appear in person before the Sebi chairman for a personal hearing as to why the management would not be superseded.

Currently, a 12-member Council of Management headed by state finance secretary Ajit Tripathy is supervising the management of the BhSE.

Sebi had slapped a show-cause notice on the BhSE Council of Management on September 24, 2002 to explain why the management would not be superseded.

Listing out the lapses on the part of the Council of Management in managing the BhSE in the aftermath of the Member Wefare Trust financial bungling and the administrative irregulaties, Sebi in its showcause notice has observed, “it appears that the Council of Management of BhSE does not have senior management to manage the affairs of the exchange and has failed to supervise the functioning of the exchange and discharge its duties in an effective manner” while inviting a show-cause as to “why appropriate action including supercession of the Council of Management, under Section 11 of the SC (R) Act should not be taken against you”.

Following the receipt of the reply from the BhSE Council of Management, the Sebi vide its letter dated October 21, 2002, has asked the Council for personal appearance before the Sebi chairman at its Mumbai office on November 9, 2002.

Sebi’s show-cause notice came in the wake of the non-compliance of several of its directives in the last couple of months. Referring to the inquiry conducted by Sebi officials on the siphoning off of Rs 1.30 crore from the Member Welfare Trust (MWT), Sebi had directed the BhSE vide its letter date January 29, 2002, to take certain actions immediately. However, most of the directives have not been complied with, Sebi observed.

Sebi had directed to form a committee consisting of the non-elected directors to enquire into the veracity of the complaints against the executive director of his alleged trading activities and non-compliance with procedures in granting loans from the MWT and to submit the findings so as to take action against him.