Citibank fraudster had big exposure in Nifty, finds Sebi

Citibank fraudster had big exposure in Nifty, finds Sebi

Puri used to trade in future and options on the 50-share Nifty Index, and lost out after undertaking multiple trade transactions, police sources said quoting the report of the Securities & Exchange Board of India (Sebi).

Police Commissioner S S Deswal said the Securities & Exchange Board of India has submitted its report to the police.

Routed funds

The fraud at the local branch of Citibank surfaced in December 2010, which lead to arrest of Puri, the branch’s customer relationship manager, and others.

The report of Securities & Exchange Board of India, which was roped in by the police to assist in the multi-crore fraud, found that Puri routed funds from accounts of 51 HNIs and corporates in the Nifty trading.

As per sources, Puri caused a loss of Rs 306 crore to the account holders, of which he invested Rs 236 crore in equity trading and paid Rs 20 crore to his alleged accomplice Sanjay Gupta and invested some of it in property. A small part of the money was also recovered by the police.

Puri allegedly paid Rs 20 crore to Sanjay Gupta, an employee of Hero Corporate, as “commission” to lure people to invest in his scheme.

The Securities & Exchange Board of India report said of the Rs 1.13 lakh crore exposure, 89 per cent or Rs 1,00,758 crore was in the option index (OPTIDX), Rs 11,543 crore in futures index (FUTIDX)and rest in future and option stocks, all on Nifty. They were routed mainly through brokerage firms Religare and Bonanza, Deswal said.

Police sources said Puri used Rs 97 crore from account of Hero Exports, Rs 62 crore from  Speed Financial Services, Rs 71 crore from Moon Beverages 71 crore and Rs 25 crore from Satyam Auto. Besides Puri, his father Raghuraj Puri, Sanjya Gupta, Gaurav Jain and Rajinder Chand are currently lodged in Bhondsi jail, near here.

Following the scam, the Citibank terminated services of eight employees, including Shivraj Puri, of the Gurgaon branch. Citibank is understood to have refunded the money lost in the scam to most of the investors.

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