1:33 am - Sunday November 8, 2015

CBI questions ex-Sebi chief CB Bhave

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NEW DELHI: The CBI on Monday questioned former Securities and Exchange Board of India (Sebi) chairman CB Bhave in connection with grant of sanction to Jignesh Shah-founded Financial Technologies (India) Ltd and MCX to function as a full- fledged private stock exchange. Sources said the agency was satisfied with Bhave’s replies but he might be questioned again.

Bhave was examined in Bangalore by a team of CBI officers two months after the agency registered a preliminary enquiry (PE) against him, another former member KM Abraham and FTIL and MCX, among others. TOI had reported on Monday that Bhave will be questioned. The CBI had questioned Abraham last week.

CBI sources said present Sebi chief UK Sinha might also be examined to understand the grant of sanction to a particular company.

Bhave reportedly denied allegations of quid pro quo to the CBI team.

The PE was registered in connection with alleged irregularities in granting sanction to the MCX Stock Exchange (MCX-SX) by Sebi in 2008 and renewing the recognition in 2009 and 2010.

Bhave was examined to ascertain how MCX-SX was granted permission despite opposition by Sebi when he was head of the regulatory authority.

Efforts to contact Bhave, an IAS officer of 1975 batch from Maharashtra cadre, were not successful.

Bhave became Sebi chairman in February 2008 and his three-year term ended in February 2011. Abraham’s term as a whole- time member of Sebi also ended in 2011. After the PE was registered, Bhave had said CBI was working with a “crazy logic” and also indulging in “pick and choose” policy.

He had said CBI will have to “publicly apologize” to him for tarnishing his reputation if they find no substance in the allegations.

“It’s a completely crazy logic that CBI has. As regulators, we found that there was a need to create and encourage competition. NSE was the dominant player in the currency derivatives market and BSE was unable to compete with NSE. So by licensing a third party, in this case Shah’s MCX-SX, we helped create competition. Is that a crime?” Bhave had asked.

MCX-SX was set up by FTIL and its commodity exchange arm MCX and began functioning as a full-fledged stock exchange last year after a prolonged battle with Sebi. The exchange was initially granted permission for only a limited segment of currency derivatives in 2008, on the condition its licence would require approval every year.

Last year, Sebi asked MCX-SX to restructure its board and governance structure after a payment crisis broke out at the National Spot Exchange Ltd (NSEL), also promoted by FTIL.

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