>>Investors allege shares worth crores vanished from their Indiabulls accounts in a blink
>>They say the company played with their money without telling them, and is now refusing to refund
>>Papers available with MiD DAY show that Indiabulls contradicted itself in submissions to the police and a complainant
CLOTH merchant Gurinder Singh Sahota customarily checked his demat account in the morning of January 22, 2008, from his computer at his south Delhi office-cum-residence. It reflected his total investment in shares bought through financial services giant Indiabulls Securities Limited (ISL): a little over Rs 1.25 crore.
Minutes later, when he was to check again, he nearly fell off his chair.
The account balance of his shares showed zero.
Sahota told MiD DAY in course of its investigations in the last two weeks that Indiabulls had played with his shares in the market without informing him and drained his account. A year later, he is still fighting for his money.
"Every time the market crashes, people allege such things. These are false charges," said Indiabulls Financial Services Limited CEO and public face of the group Gagan Banga on phone. While he asked MiD DAY to e-mail Sahota's case details, the company has not replied to the e-mail sent last Wednesday.
Sahota alleged ISL had stonewalled him, and market regulator Securities and Exchange Board of India (SEBI) and the Economic Offences Wing (EOW) of the Delhi police sat tight on the case.
At least four other investors have told MiD DAY that they lost between Rs 63.7 lakh and Rs 2 crore each.
The vanishing crores
Indiabulls Securities Limited investors allege massive fraud of selling shares without informing them
IN what could be just the tail of an elephant, a few investors have alleged to MiD DAY that their crores have vanished overnight because Indiabulls Securities Limited (ISL) played with their shares without informing them.
At least four other investors said they lost between Rs 63.7 lakh and Rs 2 crore each. Papers in possession with MiD DAY show that Indiabulls even contradicted itself in separate submissions to the police and the complainant.
Gurinder Singh Sahota's Rs 1.25 crore investment vanished on January 22, 2008, just as the market had started crashing. His share account suddenly went blank.
"When I called up Indiabulls in panic, the company's regional manager told me that there had been some error, and it would be fixed in two or three days," said the 37-year-old cloth merchant.
After waiting a few days, Sahota complained to the Delhi police. The case then went to the Economic Offices Wing (EOW).
Indiabulls, in its reply to the police, said Sahota's shares were pledged against a loan.
"The complainant has vide the aforesaid agreement availed the loan facility against the security/pledge of shares and agreed to pay an agreed rate of interest on the amount borrowed," ISL wrote in its reply to the police on July 17, 2008.
However, barely a month later on August 12, it contradicted itself in a letter to the complainant, saying: "No pledge had been done in your above-mentioned account number."
MiD DAY has letters from ISL which say none of Sahota's four accounts were pledged.
In a rejoinder addressed to Ritika Salhotra, officer in charge of the National Stock Exchange of India, on October 27, 2008 Indiabulls mentioned that the shares were sold on the instruction of the client.
"Till date the company has not furnished any details about how, when, where and through which mode the instruction to sell the shares was given," said Sahota.
According to member-client agreement rules of the National Stock Exchange (NSE), the company should be able to produce a written record or voice recording of the client's instructions on buying or selling shares.
"I have complained to agencies like the Securities and Exchange Board of India (SEBI) and the NSE but am yet to get an answer or the money that I have lost," he said.
Nanu Kaur, one of the SEBI officials investigating Sahota's case, said she was not authorised to speak to anyone except the complainant. "We cannot talk about this. If the complainant calls me, I will tell him about the progress in the case. You can talk to our regional manager (Amarjeet Singh)."
Singh did not come on the line despite repeated calls by MiD DAY. His staff officer asked us to speak to one Piyush Gupta at SEBI's Mumbai office. But Gupta refused to speak, saying he was not authorised to speak to the media.
"Every time the market crashes, complainants allege such things. These are false charges," said Indiabulls Financial Services CEO and public face of the group Gagan Banga on phone. While he asked MiD DAY to e-mail Sahota's case details, the company has not replied to the e-mail sent last Wednesday.
"If there has been any wrong doing then it will be mentioned in our board meeting. I do no have any idea about his case. I am not in charge of the operations, I am the non executive chairman of the board," said SB Mathur, Chairman of National Stock Exchange.
SBK Singh, additional commissioner of police, EOW, Delhi police, said: "We get thousands of cases. I cannot talk about this one off-hand."
Early March 2008, a Delhi court had ordered the Delhi police to register an FIR against Indiabulls Financial Services Limited for allegedly trading in doctor AM Motivala's account without his knowledge.
The judgment, delivered by Additional Metropolitian Magistrate Sudesh Kumar, a copy of which is available with MiD DAY, lambasted the EOW for conducting an improper inquiry into his case.
"Complainants have also placed on record letter written on behalf of accused 3 [Banga]â¦wherein the accused admitted the allegations made by the complainants that the operator of accused 1 [Indiabulls Financial Services Limited] who was punching the orders had erroneously punched complainant's customer ID," the court noted.
AM Motivala, a Safdarjung resident, declined to speak saying that the matter was sub judice.
According to his complaint in September 2005, Dr Motivala alleged that the Indiabulls company had transacted on his behalf without his knowledge and had not providing him with account details. On October 28, 2005, he received the details from Vikas Anand, then associate relationship manager of the company, he found three illegal transactions.
An FIR has been registered at the Connaught Place police station under sections 409 (criminal breach of trust), 418 (cheating one whose interest the offender is bound to protect) and 120B (criminal conspiracy) of the Indian Penal Code and Section 66 (hacking) of the Information Technology Act.
Milap Arya, a Lucknow resident, told MiD DAY on Thursday that senior ISL office-bearers from the branch office had sold his stock holdings of Rs 59 lakh without his permission.
"Moreover, they told me that I owe them Rs 16 lakh," he said.
According to his complaint filed with SEBI on March 11, 2008, the Indiabulls company had not furnished any proof that he instructed them to sell off his shares.
Arya has written to the Prime Minister, finance minister and the President but has not got any refund. He told MiD DAY that he was about to appoint a lawyer and move court.
"The whole thing has left me penniless," he said.