Millennium Post

Stock brokers & portfolio managers under scanner

As an estimated Rs 6,000-crore payment crisis continues to engulf NSEL, some stock brokers and portfolio managers have come under regulatory scanner for inducing HNIs and other investors to trade on spot market commodity exchange with promise of high returns.
They are also being probed by Sebi for possible diversion of funds from equity and derivative portfolios for trading on National Spot Exchange Ltd (NSEL) through their own proprietary accounts or client accounts, sources said.

Sebi has received complaints that these brokers were offering returns of up to 15 per cent to their clients, by asking them to place one-day buy orders for various commodities on NSEL platform, followed by immediate sell orders to be executed in next few days.
Besides, many brokers could also have been taking proprietary positions on NSEL with their own or clients' money as a hedging instrument in the wake of dwindling returns in the capital markets, sources said.

The issues being probed also include possible collusion of top brokerages in the stock market and those having significant exposure to NSEL, sources said, while adding that some suggestions have also been made to Sebi to look into various other aspects of this fiasco.
Sebi, as of now is limiting its investigations to possible role of stock brokers and portfolio managers who come under its regulatory jurisdiction, although it is open to extending all possible help to other regulators and authorities such as commodities regulator FMC, Consumer Affairs Ministry and Finance Ministry that are together looking into the matter.
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