Credit Suisse First Boston (India) says accusations of insider trading levelled against it by the Indian authorities, as reported in India's Financial Express newspaper, are unfounded.This content was published on March 7, 2001 - 12:21
The reported charge is linked to a merger which will create the largest private sector bank in India.
The Securities and Exchange Board of India (SEBI) was quoted by the paper as saying that it had "prima facie" evidence that CSFB was involved in insider trading. It said there had been "unusual movements" in the share prices of UTI Bank and Global Trust Bank just before they announced plans to merge.
"We have found prima facie proof that CSFB's operations in these bank stocks prior to and after the announcement of the merger had led to unusual movements and this has been conveyed to the Reserve Bank of India (RBI)," an unnamed SEBI official was quoted as saying in The Financial Express.
Responding to the report, CSFB called the press report "erroneous".
"CSFB has not received any communication from SEBI which relates to the press report, nor was it given an opportunity to comment on the allegations prior to the report's publication," the finance group said in its statement.
The paper added that the RBI, which has yet to approve the merger, is now looking into the matter. Global Trust Bank chairman, Ramesh Gelli, has said the merger could be completed within two to three weeks.
The report noted that suspicions of insider trading had first been noted following a "massive spurt" in the share prices of both banks, and a marked increase in trading volumes ahead of the merger announcement.
CSFB has refuted the notion that it was at any time in possession of priveleged information regarding the merger of the two banks.
"Our books are completely open to regulatory scrutiny at any time. CSFB maintains transparancy with the regulatory authorities in all jurisdictions where we operate globally. In India we enjoy a strong and cooperative relationship with the regulators and the exchanges," said K R Bharat, managing director and country manager of CSFB India.
CSFB is also among a group of brokerages under investigation by SEBI in connection with the sharp decline in India's share markets over the past two trading days.
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