Head of Company Arrested For Cheating After Scandal Closes Market
NEW DELHI, India (AP) _ Pawan Sachdeva, head of M.S. Shoes East Ltd., has been arrested on charges of cheating investors in connection with a $4 million default that closed the Bombay stock market for three days, police said Friday.
A police spokesman said Sachdeva was detained Thursday night in New Delhi.
Sachdeva is accused of rigging shares of his own company before the launch of its public issue of $225.4 million last month.
India’s federal investigative agency said it also has registered a case of criminal conspiracy and cheating against three senior members of the Securities and Exchange Board of India, the country’s market watchdog, and two officials of government-owned State Bank of India Capital Markets, the lead manager of the issue.
These officials allegedly connived with Sachdeva for financial gains but they have not been arrested.
The Bombay stock exchange transacted no business for three days last month to sort out problems created by his broker’s $4.34 million default.
The stock exchange declared his broker, R. S. Jhaveri, in default for his failure to meet a payment due last month for Sachdeva’s company.
It was the biggest default ever on the Bombay stock exchange. The Securities and Exchange Board of India is probing into the dealings of stock brokers trading in Sachdeva’s company.