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Where are the bears?

Where have all the bears vanished all of a sudden?

Till the other day, all we heard about were the bears, the bears and the bears. How they subverted the Bombay Stock Exchange. How they were caught accessing and misusing privileged information. How they deliberately conspired to kill the euphoria created by Yashwant Sinha's investor-friendly budget. How they drove down the stock prices to an all time low in their desperate greed to make more money for themselves.

It was a venal tale. Of insider trading, sordid market manipulation and unstoppable greed. It was about cheating investors and pulling the bourses down at a time when India was just about ready to prove that it is possible to have a market that did not catch a cold every time Nasdaq sneezed. The president of the Bombay Stock Exchange was forced to step down in disgrace. All the brokers on the board were sacked. And it appeared that once the bears were caught and punished, things would return to normal.

But that was not to be. All of a sudden, the story changed.

The entire focus of the media swung away from the bear cartel and their crimes. Crimes that led to the crisis in the stock market. Crimes that led to the sharp drop in the Sensex and huge loss of shareholder wealth. Crimes that led to small investors losing thousands of crores simply because the bears wanted to trap a bull and, to achieve this, they set up this elaborate web of deceit and intrigue that managed to drag down the whole stock market with the bull. It was like setting fire to an entire forest just to trap a wild boar. It was not shikar. It was vandalism.

Who were the victims? Ordinary middle class people who lost their life's savings. A whole lot of brokers who were driven to penury and some to suicide. Foreign investors who are so sick of the dirty games being played out on our bourses that they are happy to pack up their bags and go to other, safer markets. Financial institutions who already have a difficult task trying to make money in a thin market where 6,000 shares are listed but only 50 are actively traded. And, of course, the regulators themselves who were caught unawares.

Ketan Parekh has got his just deserts. He was caught with his hand in the cookie jar and there is no way he can escape punishment for his banking fraud. There will probably be enough evidence to also nail him for ramping up the K-10 stocks together with the promoters of the companies. In any case, his entire edifice is now crumbling and, if rumours are to be believed, he is in one hell of a jam. Fine. I am sure the CBI will also succeed in tracking down his broker friends, business associates and political benefactors. Enough photographic evidence exists of who he partied with, who his friends were. Maybe the investigators can follow that trail. But the fact cannot be ignored that Parekh was the target, not the cause of action. The cause of action lay in his entrapment. Those who set the forest on fire.

Of course Parekh is to blame. He ramped up stocks. He misused the banks. He buggered the system. But the fact still remains that it was his rivals, the bears, who engineered the whole crash. They tanked the market. They drove down the technology shares. They beggared the small investors. What is worse, in the process they made a huge killing. Reportedly in excess of Rs 500 crore. You can blame Parekh. You can blame the banks he monkeyed around with. You can blame the financial institutions. You can blame the regulators. But you cannot allow the bears to go scot free by shifting the focus away from their crime, from the cause of action that sent everything into a tailspin and wiped out over Rs 50,000 crore of shareholder wealth.

The problem with such investigations is that those who know how to manipulate the media always get away. They have the skill and the influence to turn away the needle of suspicion from pointing in their direction. This is exactly what is happening here. We read long newspaper reports about Ketan Parekh's fabled wealth, his amazing lifestyle, the parties he threw, the people he met, the politicians he slept with and whose money he probably deployed on the bourses. We read how lax the regulators were. How they turned a Nelson's eye to their favourite market manipulators. How the top financial institutions waltzed in perfect step with Parekh. I am sure many of these stories are true and need to be investigated.

But the investigations must begin with those who felled the market. For they are the ones who subverted the system, who made Yashwant Sinha look like a fool, sending his dream budget for a toss. Their goal was simple: To make some quick money through mayhem. Let them not escape the headlines now. Let them not sidestep the scrutiny. For it is they who were the actual cause of action. Not Ketan Parekh. Not RBI, UTI or the SEBI. By setting off a lynching mob against Parekh and blaming these institutions, the real culprits are now trying to escape the dragnet. We must not let them.

For they are the ones who destroyed public wealth. And, what is worse, made a huge killing while they were about it. Money that came from destroying shareholder value, investor confidence, the savings of thousands of people. You can say that is what bears are meant to do. But these are cruel, ruthless people who deserve punishment. Not because they short sold a few stocks but because they short sold India.

Pritish Nandy