Date:09/09/2005 URL: http://www.thehindubusinessline.com/2005/09/09/stories/2005090903001500.htm

Back Magadh SE: SEBI to take up issue with DLF

Our Bureau

Kolkata , Sept. 8

THE Stock Exchange Board of India (SEBI) is likely to look into the workings of DLF Commercial Developers, the Delhi-based group that was named as the acquirer in the Bhoruka Financial Services dealings — the counter that was unlawfully transacted on the Magadh Stock Exchange (MSE) last month.

"We have only dealt with the immediate issue. This is not the final action from our side," Mr M. Damodaran, Chairman, SEBI, said with regard to its recent order concerning the MSE, adding that the regulator may now take up the matter with DLF as well.

The regulator has also decided to step up its vigil on regional stock exchanges, following the Magadh incident. "This was certainly a lesson for us," the SEBI chief said.

The Bhoruka case shot into limelight in view of the fact that the stock was last traded on the Bangalore Stock Exchange (where it is listed) 17 years ago — in 1998 for Rs 5. It was admitted in the MSE under the permitted category on August 1. Trades accounting for 98.73 per cent of the company's paid up base were executed at Rs 4,490 per share, noted SEBI. These were executed by Bhoruka's promoters, while DLF was the acquirer.

SEBI, which has already named certain Bangalore-based entities (including Pragya Enterprises) in the case, had earlier passed an order directed against the exchange, the officiating executive director, and a MSE member (Rajat Share and Stock Broker).

The MSE council was superseded in 1997 and an administrator appointed to oversee its duties. The exchange has so far failed to establish a settlement guarantee fund (SGF); it cannot commence trading until an SGF is created.