Keep eye on brokers with Parekh links: Sebi

The Securities and Exchange Board of India, along with income tax authorities, have 'informally' asked stock exchanges to keep tabs on brokers, who, they suspect, are trading on behalf of stockbroker Ketan Parekh.

The move gains significance because Parekh has been barred from stock market operations.

Also, the move is aimed at preventing any default on the stock exchanges and keep tabs on Parekh's assets.

The Joint Parliamentary Committee report on last year's stock market scam, tabled in Parliament on Thursday, had concluded that Parekh was a key player in the scam.

"There was a collusion among Parekh, banks and corporate houses," the report said.

The measure is also seen as part of Sebi's move to step up its surveillance system, especially after the lapses brought to light by the JPC.

The panel noted that the quality of Sebi's inspection in October 1999 and September 2000 was poor.

It said the inspection could not detect the Calcutta Stock Exchange's non-inclusion of crystallised long positions in the dues outstanding on the part of brokers even though this was clearly violative of Sebi's instructions of July 1999.

"This is not a satisfactory situation and it reflects poorly on the capital markets regulator. Checking irregularities and malpractices of stockbrokers is one of the primary functions of Sebi, which can be achieved through inspection," the JPC report said.

The committee urged that Sebi should augment its staff strength, if needed, and progressively increase its coverage of inspection of brokers.

It pointed out that despite procedures set out by Sebi for inspection of stock exchanges and taking follow-up action, it had not been able to ensure compliance.