The Hindu : Business : Charges of insider trading in Global Trust

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Saturday, Aug 14, 2004

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Charges of insider trading in Global Trust

By Our Special Correspondent

NEW DELHI, AUG. 13. The Bhartiya Janata Party has charged that two crore shares of the collapsed Global Trust Bank (GTB) had been sold through a foreign entity just before the Reserve Bank of India declared a moratorium on the bank on July 24.

Making this charge at the regular BJP briefing today, the former member of Parliament and Convenor of the BJP Investors' Cell, Kirit Somaiaya, said the information about the closure of GTB was leaked by the Finance Ministry to the Ketan Parekh group which earned Rs. 36 crores by selling two crore shares between June 14 and July 24 this year.

"In the four preceding working days before July 24, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) show heavy trading of GTB shares. During these four days, 68.27 lakh shares were sold and delivered at the NSE and 19.84 lakh shares at the BSE,'' Mr. Somaiaya said.

According to Mr. Somaiaya, Oriental Bank of Commerce had submitted its application for the Global Trust Bank merger in the second week of July and the Finance Ministry authenticated it on July 23. OBC had discussed the GTB merger proposal during its board meeting on July 2, he charged. Mr. Somaiaya also charged that foreign entities had sold their 16 per cent holding in GTB a few days before July 24 on the basis of information made available to them about the merger.

"It is purely insider trading. Instead of protecting 20,000 small investors, the Finance Ministry, the RBI and the Securities and Exchange Board of India have started passing the buck to each other,'' Mr. Somaiaya charged. He said the BJP would be taking up the issue in Parliament and would demand a full enquiry and investigation into the whole episode.

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