Stock of scam-tainted company gains 30% in five days; has doubled in value from a low of Rs47.35 in May

Money Matters Financial Services Limited has seen an astonishing more than 100% jump in its stock price since May 2011 when it touched its lowest level this year, following the loans-for-kickbacks scam involving LIC Housing Finance scam that broke in November last year. While the reason for the gain is not known, the stock price continues to go from strength to strength. Market sources say that there is no apparent reason for the sudden surge, except probably that the company is confident about burying the bribery scandal.

The rise in the Money Matters stock began in May and it has shot up higher since the chairman of LIC Mr TS Vijayan was cleared on 4th July. The Money Matters stock gained more than 10% today to close at Rs96.10, up over 30% from its close of Rs73 on 4th July.

While LIC Housing Finance, which suffered the maximum after the scam, has shown a slow recovery of 4% since the crash in November, Money Matters is suddenly galloping at a stunning pace. On 23rd November, the Money Matters stock closed at Rs663.90, while LIC Housing Finance closed at Rs261.63. The next day, when the scam broke, the stocks suffered heavily, and Money Matters fell to Rs531.2 and LIC Housing Finance to Rs213.71.

It was downhill for both stocks after that. LIC Housing recorded its lowest level on 17th January at Rs151.75, while Money Matters plunged to Rs47.85 on 18th May. However, it has started to recover mysteriously since then.

Money Matters, however, refused to say anything about this sudden gain. "Ours is a listed company," a company spokesperson said. "There are a lot of factors that push stock prices up or down. It is difficult to pinpoint any one particular reason. All information is available in the public domain and we cannot add anything to that."

The otherwise little-known Money Matters Financial Services shot into the limelight in November last year, when its managing director and chairman Rajesh Sharma and other senior officials were arrested by the Central Bureau of Investigation for allegedly bribing bank officials to sanction huge loans to housing firms, bypassing rules and regulations.

Some big names from the banking world were also dragged into the controversy. Among Money Matters clients were entities like DB Realty, Hindustan Construction Company, Suzlon Energy and Vatika, all of whom distanced themselves after the scam broke.

Ramchandra Nair, CEO, LIC Housing Finance, Naresh Chopra, secretary (investment) LIC, RN Tayal, general manager of Bank of India (Delhi), Maninder Singh Johar, director, Central Bank of India, and Venkoba Gujjal, deputy general manager, Punjab National Bank (Delhi), were also arrested in the scam. While they were released on bail later, the Bombay High Court refused bail to Mr Sharma earlier this year, saying that he was the 'kingpin' in the multi-crore kickbacks-for-loans scam.

Asked whether the air has been cleared about the controversy and whether some confidence-building exercise has boost the company's stock price, Money Matters was again evasive. "The company definitely does what it is supposed to do and we have taken a few initiatives, but we cannot comment on this. As insiders, we cannot give anyone any information," the spokesperson said.

In the 2010-2011 annual report, Rajesh Sharma had said about the CBI investigation, "We believe this to be the hand work of some of our rivals who wished to curtail our speed of progress. We have denied all the charges and are sure that our officials will prove their innocence. We would not like to offer any explanation here as the matter is sub-judice. However I would only like to add that there has been no case against the company for any sort of wrong doing and there are no restrictions on the functioning of the company."

Commenting on the Money Matters stock movement, an analyst said, "The stock is showing a sturdy recovery. It is difficult to comment further on this, since no information is available publicly about this. But since the controversy hasn't settled down, we would ask the investors to be cautious."