Sebi AO for no action against JM Morgan

However, G Babita Raidu, AO, in the order ruled that the term “Telephone Records”, is equivalent to term “Documents”. The order also acknowledged the powers given to Sebi to call for market-related information from any person associated with the securities market and that entity is obligated to furnish the information to the regulator.

However, the order said there is no case against JM Morgan for consciously avoiding complying with the directions of Sebi as the information in question was not within JM Morgan’s possession and in any case, it was not obligated to preserve the required information.

Sebi had initiated a broad based investigations against various entities for the market crash of May 17, 2004 when the Sensex fell more than 800 points intra-day, the trading was closed twice on the BSE and the NSE and Sensex lost 568 points on that day.

Among other entities, the transactions carried out by Morgan Stanley and Company International Ltd, a foreign institutional investor (FII) and its sub-account during the relevant period were also investigated. It was found that the FII had sold shares worth Rs 122 crore and purchased shares worth Rs 73 crore with a net short position of Rs 49 crore in the cash segment.

In F&O, during May 10-14 2004, the FII allegedly built short position in Nifty May futures and stock futures to the extent of Rs 730 crore.