No chances of terrorists manipulating stock market: Government

  • IANS, New Delhi
  • |
  • Updated: Aug 11, 2009 21:18 IST

There was no possibility of terror outfits manipulating the country's stock market, the government informed the Supreme Court on Tuesday.

"The government, at present, does not have any reliable, credible information of any surreptitious entry of a terrorist outfit into the stock market," the Department of Revenue said in a fresh affidavit before the Supreme Court which is hearing a lawsuit seeking direction to the government to retrieve the Indian black money stashed abroad.

"The Board (Securities and Exchange Board of India - SEBI) as well as stock exchanges, however, have been administered sufficient caution to look out for any suspicious and irregular entrant into the stock market activity," said the affidavit filed in response to a public interst lawsuit by former law minister Ram Jethmalani.

Alleging a nexus between Indian black money stashed abroad and terror funding, the lawsuit has accused the government of sitting idle on the issue of retrieving such black money.

"Upon enquiry, it has been confirmed by the Bombay and Chennai Stock Exchanges that no fictitious or notional companies can be stated to be involved in stock market operations," a second government affidavit filed in response to the lawsuit said.

Elaborating on the SEBI mechanism for regulating the Foreign Institutional Investors' (FIIs) investments into the stock market, the government ruled out the need to ban participatory notes (PNs).

"In view of the fact that participatory notes are market instruments and when they are created and traded abroad it is not possible to ban the issue of the said instrument," it said adding they are being regulated effectively and efficiently by SEBI.

The government said it was mandatory for all FIIs to report at the end of every month all the informations relating to participatory notes issued by them including the names of the subscriber to the said participatory notes.

The government, however, agreed to the possibility of the misuse of double taxation treaty between India and Mauritius.

"The centre is alive and conscious of the potentiality of the misuse of the double taxation treaty between India and Mauritius. In fact, further amendments to the treaty are being negotiated," the affidavit said.

The Department of Revenue brushed aside the allegation of inaction relating to stashing of black money in foreign banks by Pune-based businessman Hasan Ali Khan against whom the Enforcement Directorate has lodged a complaint for violating the Foreign Exchange Management Act (FEMA).

It termed as baseless the allegation that the government was interested in protecting powerful individuals who may have been using Khan and his wife as their nominees.


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