Post-budget meltdown was not scam, Sebi tells JPC

Our Economic Bureau

New Delhi, Oct 15: The Securities and Exchange Board of India (Sebi) chairman DR Mehta told the Joint Parliament Committee (JPC) that stock market meltdown witnessed in the aftermath of the presentation of the union budget in February was not a “scam”. Mr Mehta, however, admitted that there were certain irregularities which hit the markets adversely.

Deposing before the JPC, which is probing the multi-crore securities scam, Mr Mehta said that certain guidelines were flouted by functionaries of stock exchanges and brokers but these could not be construed as a “scam”.

JPC chairman SPM Tripathi said on monday that Mr Mehta during his deposition did admit that there was a lack of supervision at certain points of time. But since the stock exchanges did not remain closed even for a single day during the period under review, it would not be appropriate to describe the happenings as a scam, Mr Tripati quoted Mr Mehta as saying during the deposition.

Asked if the JPC agreed with Mr Mehta’s observation, Mr Tripati said that JPC was set up because the Parliament was of the view that there was a stock market scam. The purpose of the parliamentary probe was to come out with recommendations to prevent recurrence of such scams, he added.

The Sebi chief maintained that the market regulator issued guidelines for orderly behaviour of the market. Just because there was no separate circular on this, it did not mean that the regulator had not issued guidelines. Referring to irregularities in Calcutta Stock Exchange, Mr Mehta said that barring one payment crisis, settlements in the stock exchange were by and large orderly.