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'Unlike 1992, many brokers are involved this time'

Bombay, 4 April, 17:30 hours IST: Sucheta Dalal, famous for exposing the 1992 market scam, received quite a few requests to investigate scandals from those chatting online.

Ms Sucheta Dalal : Hello everybody, I'm on.

amitraj : why is it the sharemarket is always in limelight, not because of something constructive,but because of some scam, or for that matter some negative aspects?
Ms Sucheta Dalal : Hi Amritraj. Not really true. It is also in the limelight when Harshad Mehta or Ketan Parekh are ramping up stock prices. In fact its celebration time then.

Anil : welcome Suchetaji, we're ur die-hard fan n follower since past 10 yrs,especially due to frank & free views/opinions
Ms Sucheta Dalal : Hello and thanks a million!

Vandan : Will the WTO mandated opening of Imports from April 1 pose the downside risk to economic growth this year?Can Indian Investor expect at least 20% rise in BSE Index by the end of March 2002?
Ms Sucheta Dalal : Its too early to say. The Ketan Parekh mess has just begun to unravel. We need to check how many banks, bankers and brokers go under before one can talk about the Sensex in year end terms. But I do think that things will improve after the initial panic.

kitty : in what ways does the recent scam differs from the harshad mehta one?
Ms Sucheta Dalal : Actually, there are some stunning similarities. The difference is that the market is a lot safer. Considering how big the market has grown in the last nine years, it is amazing that we have not had a bigger crisis. Just one example: During Harshad's time, turnover on the BSE used to be Rs 300 crores and there was no NSE. Today BSE_NSE combined are a whopping Rs 12,000 crores.

VinayIsloorkar : The FM has gone on record that the stock markets and the economy are mutually exclusive. Do you agree?
Ms Sucheta Dalal : Hi again,Do I agree? Certainly not. Have you noticed how these sort of comments are made only when there is a crash. When the market is booming, the FM loves to take credit. Remember the day after the Budget?

Sam : Hi Sucheta can u explain what r your vies and the core reasons for the stock market fall
Ms Sucheta Dalal : Hi sam. Certainly one of the main reasons is the end of the IT mania around the world. The question really is, why do we have a payment crisis in India, unlike the rest of the world. That is due to stock price manipulation.

kitty : do u thnk tat the sebi is being fair when it bans short selling? short selling is not a crime!
Ms Sucheta Dalal : Agreed. Short selling is certainly not a crime. But in this particular situation, the temporary ban is what may have prevented the problem from being far worse than what it was. Only by squeezing turnover did the stock exchanges manage to continue trading without serious payment problems. Otherwise the trade guarantee funds too would have been wiped out.

Sam : What do you think about the role played by the market regulator and the actions taken by them?
Ms Sucheta Dalal : Well, the regulator initially failed to react. Did not monitor Ketan and finally went a little berserk with the action taken. I am all for corporatisation of stock exchanges, but I do feel that the manner in which the broker directors were all sacked overnight may have been a little hasty. It certainly does not indicate due process or application of mind.

Sam : Do the role played by the SEBI is of mere an ordiance and it has to do soimething more corrective to really revive the market sentiments rather than playing an immature role?
Ms Sucheta Dalal : No, I don't think it is the job of SEBI to revive the market. It has to play a tough supervisory role, not boost sentiment. It also has to make markets safer by bringing in checks and balances.

VinayIsloorkar : With your expertise and proven "activism" as some of your fourth estate colleagues call it would you accept SEBI chairmanship if offered?
Ms Sucheta Dalal : Nice question. The correct answer I think is that I don't answer hypothetical questions. But its so way out, one can only laugh at the thought.

finpro : Hi Sucheta! U have rightly said that the reason for the market fall is Stock price manipulation. Do U think that the market has fallen bcoz of a so-called Bear cartel(not proved so far) or an Untimely bull hammering?
Ms Sucheta Dalal : The bears can only hammer prices until they reach their true level, after that there will always be buyers. On the other hand bulls can ramp up the market endlessly. Remember ACC being pushed to Rs 10,000 as Harshad's way of celebrating his birthday? It is illogical. I think price ramping is more damaging in the long run.

rk : sucheta, do u thnk ketan parekh is more a victim than a villain? i mean he took risks and lost.. is tat wrong? is taking risks a mistake?
Ms Sucheta Dalal : Well, the risks he took involved large scale ramping of prices and a nexus with promoters. In ordinary language it is called insider trading on a collosal scale. You have to agree that it is indeed wrong.

Sam : I visited the court hering of Mr Rathi today and i got a strong belief that Mr rathi has been made a scapegoat on a day before the parliamentary discussion. Do u believe that SEBI is doing the actions under the finance ministry pressure and r the actions of SEBI justified enough without giving Mr Rathi a chance to be heard?
Ms Sucheta Dalal : I can't say whether he was being made a scapegoat. He was certainly a show piece -- to show Parliament that action had been taken. But it is also true that he did ask for information which he certainly knew that he ought not to have. The key to whether the actions were justified will be Nirmal Bang's books. We need to wait and watch.

meow : why do u think harshad mehta has not been convicted yet? its nearly 9 years since the scam was exposed!
Ms Sucheta Dalal : The court cases are on.

Anil : talking about mkt,i personally believe that KP is not a cheater ,because while evrybody is accusing him of default of payment, one must not forget that payorders encashed by him at BoI, were not pocketed by him, but deposited at BSE itself, i.e.he's an honest intention to pay, its only because of I/T raids,unfortunately,all his assets seized & hence,he couldn't make any payment to BoI/Madhavpura,what do u say?
Ms Sucheta Dalal : I don't know. You probably know him better than I do. So I wouldn't know if he really intended to pay and what was his exact nexus with Madhavpura Bank.

wa : is it right to give some organisation responsibility without giving proper authority... this is in regard to sebi
Ms Sucheta Dalal : I know that you are responding to SEBI's whining about absence of power. But I don't really agree. I certainly think that penalties imposed by SEBI ought to be far more than its present maximum limit of Rs five lakhs -- I'd suggest the maximum ought to be Rs 50 crores, but they have the powers. Also where they have specific powers of direction -- for instance the takeover code, they have failed to use them. SEBI should first be asked to show that it deserves to get more powers. Remember BPL, Videocon and Sterlite which have not been punished even two years after the investigation is complete.

anir : how about punishing the bear cartel, is that going to happen or no
Ms Sucheta Dalal : Weren't they the first to be caught? In fact, they were also the first to be raided. They seem certain to be punished. After all look at what they did to Sinha's Budget.

VinayIsloorkar : Kp is technically in trouble because of the Pay order thing and not for ramping up the prices artificially. Suppose he had got out in time , would you be supportive of him? Don't you think that the system misses the woods for the trees?
Ms Sucheta Dalal : Well, it is clear that he could not get out in time. And that is not because he did not see global trends or the direction in which IT stocks were headed. He was trapped by the complicated web of front companies, promoter-broker deals that he had involved himself with. There was no exit and that is why the payorder scam happened.

jkcdc : Ms Sucheta I mentioned 'arbitage' between NSE & CSE.
Ms Sucheta Dalal : Wasn't that arbitrage the most dangerous for the market. I think it is a good idea that arbitrage between the NSE and CSE would end, because it endangers the NSE which is far bigger and a much better run exchange.

sps5 : Madam , going by the pattern of scams, although there are elements in systems/market doing all sort malpractices , but it is investors intention to get unrealistic returns in a short span of time which led to their misfortunes.what are your opinions ?
Ms Sucheta Dalal : Yes, Greed is always a factor. That is why investors came flocking back to the IT book after having burnt their fingers very badly during the vanishing companies saga.

finpro : Where is the proof of existence of the Bear cartel whereas the Bulls have a proven track record?
Ms Sucheta Dalal : I think by now there is a good enough audit trail of inspired or informed selling. Also those secret meetings at Wall Street (not in NY but behind Dalal Street).

Govind : Sucheta, isn't the system vistimising the broking community? Agreed, there a few who have defruaded but then they are not the main culprits, are they? The bank officials are the custodians of depositors money, KP is not. I think, like in 1992, an attempt is being made to brand what essentially is a banking scam, as a stock market and broking scam. What do have to say on this??
Ms Sucheta Dalal : Not really. 1992 was truly a banking scam and Harshad did not operate through too many brokers. This time there are a lot of brokers who operated for Ketan. They are some of the biggest names in the business and have been called for questioning. In fact, it is shocking that a firm like First Global, which has built such a rock solid reputation, finds itself embroiled. Brokers are certainly not innocent. I'd only agree that some genuine brokers, who have worked as true corporate brokers, have had their reputations needlessly tarnished as a community.

Jiten : hi sucheta! what would u like to say to the small investers at this point in time
Ms Sucheta Dalal : Just one thing that many don't seem to know. If you have genuine trades and have been cheated by your broker, there is a good chance that you can get at least part of your money back from the Investor Protection Funds at stock exchanges.

mandy : Hi, as u know the FM has announced that June Rolling settlement is going to be introduced in majority of the scrips. Do you think that it will serve the purpose?
Ms Sucheta Dalal : It will reduce risks. In fact the date may even be advanced.

ram : okay let's beat it, she has left. For another scam???
Ms Sucheta Dalal : Well, find me one. I'll thank you!!

VinayIsloorkar : You did an expose in 92.The same thing gets repeated now. Did you feel humiliated / frustrated at any point of time that the system cocked a snook at you?
Ms Sucheta Dalal : Not really. In real terms the system has indeed changed a lot. What is pathetic is the manner in which tax payers money is wasted for nine long years and counting. The NHB-ANZ Grindlays problem is the worst example of how mindless is the system of settling financial disputes.

ricky : sucheta, do you think that the cbi will be able to gather any real evidence against KP?
Ms Sucheta Dalal : yes. They already have, say my sources. But will they use it effectively -- that is another matter.

anilkapadia : what conclusion abt the HFCL connection in the sukhram case -allforgotten"?
Ms Sucheta Dalal : It was mothballed wasn't it? It certainly did not stop HFCL going on to the high growth path again.

barbeque : who do u say r the villans of the scene and victims of the scene
Ms Sucheta Dalal : Too early to say.

anir : i think we need someone like kp to make money in indian markets
Ms Sucheta Dalal : Well well, everyone has his fans.

subrat : Hi. Do you think we've seen the end of the banking scam or is this just the tip of the iceberg ? with retail investors be the Titanic sailing towards the iceberg ?
Ms Sucheta Dalal : I don't know if it is Titanic, but it is certainly the beginning.

barbeque : can u pl. suggest that after all this banking and stock market thing which is the best place to invest
Ms Sucheta Dalal : That is a question I have no answer for and haven't got a good enough one from anyone else either. If you can't invest in gold, real estate, stocks and even PFs because the interest rates is constantly slashed, what do you do? If anyone has a answer, share it with us.

scandalwood : Thereare so many cooperative on the brink of collapse, run by politicians and cronies in interior Maharashtra. I'm sure its the same all over. Cant RBI swallow the bitter clean up pill asap than dealy the inevitable?
Ms Sucheta Dalal : It is not the RBI's call. It is a political decision to end dual regualtion and put them entirely under RBI. But, like you said yourself, the politicians prefer to retain control even if a few co-ops go under.

saujanya : mam, have we seen the marketss bottom out??
Ms Sucheta Dalal : May be soon.

Ravikiran : mam, does this stock market crash has any impact on the finance policies just unvieled
Ms Sucheta Dalal : Hopefully not. We've had a good Budget. It would be a pity if it goes for a toss.

Shivam : Do you think SEBI is doing enough to regulate the stock markets
Ms Sucheta Dalal : No.

subrat : pushpendra, fund managers have to ride the market, otherwise they underperform, and get redemptions. right, sucheta ?
Ms Sucheta Dalal : Yes, absolutely.

bombayite : ms. dalal, is it true that most of the money flowing around is actually sourced from the underworld?
Ms Sucheta Dalal : Cannot be. There is plenty of genuine money and even more black money without turning to the underworld. Then there is Indian money abroad which has found its way back via the FII route.

Devang : Don't you think that all exchanges should have uniform settlement periods ? Different settlement cycles unnecessarily creates arbitrage opportunities for exploitation by the brokers.
Ms Sucheta Dalal : Absolutely. This time the different settlement periods and arbitrage almost brought a nationwide system to the brink. Initially turnover may drop but it is good for the markets in the long run.

amit : what sort of reforms would you recommend to stop scams happening with regularity?
Ms Sucheta Dalal : Strict supervision, stringent punishment and quick decisions.

rajkumar : Hi Sucheta, I asked u that are journalist are responsible that they do not expose any scandal at the right time. Do not u think that they do have become corrupt
Ms Sucheta Dalal : maybe. Who can speak for an entire community?

Ms Sucheta Dalal : Ok guys. Thanks for the questions, but I cannot type anymore!! Bye.

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