Even as the Ludhiana Stock Exchange (LSE) was facing the challenge of saving its existence, two alleged frauds in past 10 months has brought a bad name to it, also raising questions on its functioning and credibility.
The first fraud involved voting allegedly on the name of a dead person in the elections of the LSE limited and the LSE securities limited in November last, while the other scam involving embezzlement of Rs. 1 crore in the LSE securities limited, erupted recently.
In the voting fraud, some of the members had casted a proxy vote in the name of a dead person by making forged permission.
Votes in the name of Chand Kishan Hazari were casted in the polls of the LSE securities limited and LSE on September 15 and 18 last year, respectively, even though Hazari, a resident of New Delhi, was passed away on May 1 in 2012.
Though the company's management did little to finding out the culprits, even a committee was constituted for this purpose. Moreover, some of the members of the company even went to the extent of lodging police complaints. The matter is still sub judice.
Chairman of the LSE limited VP Gaur said the recent embezzlement had definitely brought a bad name to the company, but the board members were meeting regularly and culprits would be punished.
However, no police complaint has been lodged into the Rs. 1crore embezzlement, however a four-member committee was constituted to inquire into the matter.
As of now, the board seems to be satisfied with the developments, as entire amount with interest have been deposited back into the company's account, even though culprits remain scot free. The board of directors, which is probing the matter, seems to be in no mood to lodge a formal police complaint in this connection.
All this is happening, at a time when LSE was facing closure under the exit policy for de-recognised and non-operational stock exchanges across the country.
As per the policy, any regional stock exchange across the country will have to show net worth of Rs. 100 crore by May 2014 and annual trading turnover of Rs. 1,000 crores at its platform by May 2015 to save itself from compulsory or voluntary exit. The stock exchanges, however, have been given the option of merger with other regional stock exchanges to fulfill the conditions collectively.
In March, the LSE had decided to opt for merger with the Kolkata Stock Exchange, but not finding the merger option a viable one, the LSE had virtually dropped the plan.
Gaur said we had observed that the merger with other stock exchanges were not going to help the company in any way, thus the plan of merger was dropped.
“The company has no other option than of voluntary disclosure that will lead to closure of the company. A general house of the company has been called on July 15 to decide about the further course of action in this regard.
Committee records statements
The inquiry committee probing into the matter has recorded statements of three employees, who have been suspended in this connection.
Chairman of the committee Ajay Chaudhary said the three employees were quizzed separately. “There are some contradicting points in their statements and now committee will inquire them collectively,” he said, adding that any decision in regard to lodging a formal police complaint would be taken after the inquiry was complete.
Meanwhile, Vishal Gumbar, who resigned as chairman of the company, has also resigned as member director of the company. The board has accepted his resignation.