Probe into insider trading at Satyam

Wednesday, January 14, 2009 at 11:01 am

The probe into the Satyam scam now seems to be pointing at insider trading. Sources say some investors may have been informed that Raju was about to confess, and therefore sold their shares before the stock crashed.

Finance Ministry sources told TIMES NOW that the ministry has started an independent enquiry into Satyam the transactions. Different wings of the Finance Ministry are likely put Stayam accounts under the lens. Moreover, Enforcement Directorate is also likely to look at all foreign funds raised by Satyam and their utilisation.

Sources said that the Finance Ministry is also looking at capital gains tax paid by Satyam and Maytas entities for large share transactions. Satyam and Maytas’ land transactions are also under the scanner by the tax department to ascertain any evasion. Moreover, Finance Ministry is planning to look at IT exemptions given to Software exports under Section 10A, 10B, sources said.

COMPLETE COVERAGE: Satyam Fiasco

The initial investigations by the Registrar of Companies (RoC) into the Satyam scam has revealed large-scale selling of the company’s shares by institutional investors just days before the scam made headlines.

Sources say five sales between December 23rd and January 5th totaling over Rs 2 crore shares are under the scanner. These sales were all involving shares pledged by the Raju family with various entities to raise loans.

A closer look at the five transactions which seem to substatiates allegations of insider trading.

* On Dec 23, DSP Merrill Lynch sold 39 lakh shares at an average price of Rs146 per share

* Dec 23 & Dec 24, DSP Blackrock sold a little over 74 lakh shares of Satyam at an average price
of almost Rs 126 per share

* On Dec 29 & 30, Deutsche Bank sold over 47 lakh shares at a time when the scrip was bouncing
back somewhat, averaging Rs 146 & Rs 156 respectively

* On Jan 2, HDFC Mutual Fund offloaded 50 lakh shares at an average price of Rs 177 on that
day

* On Jan 5, two days before Raju’s “confession”, ILFS Financial Services also opted out, selling 35
lakh shares on a day when the price averaged Rs 168

Former Satyam director open to interrogation or arrest

Meanwhile, former cabinet secretary and ex-independent director of scandal-hit Satyam
Computer Services TR Prasad today said, he is in Delhi at present and is ready for interrogation by any investigative agency.

Prasad said, “I am in Delhi presently, I appeal through this statement that if any investigative agency would like to interrogate me or is empowered to arrest me, kindly send a message to my email id … so that I can extend full cooperation to them”.

Responding to media reports saying that he is likely to be arrested, Prasad said, “So far no investigative agency has contacted me.”

Pressure on govt to bail out Satyam

Prime Minister Manmohan Singh yesterday once again met with his key cabinet colleagues and senior Finance Ministry officials to discuss the Satyam case. (Read more)

The government will also need to show that despite a fraud of such huge proportions, it is capable of stepping in and running the show.

With India Inc’s image left dented by the Satyam episode, the government is under pressure to regain the confidence in customers. And, importantly, protect the jobs of Satyam’s 53,000 employees.

A bailout has been spoken of in hushed tones. But given a paucity of funds, sources say a consortium of banks could be asked to step forward with a special package to help Satyam tide over the liquidity crisis.

Politically, for the UPA government, this is also a challenge because any layoff in Satyam will have a direct impact on politics in Andhra Pradesh–a state run by the Congress, which goes to polls later this year.

( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)

Probe into insider trading at Satyam

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