Hearing a writ petition filed by IPG, the HC asked Delhi Police to investigate into the alleged scam and file status report by 1 March 2012
The Delhi High Court has asked Commissioner of Police and the Economic Offenses Wing (EOW) to investigate into an alleged scam committed by Religare Securities, its directors and officials and file a detailed status report by 1st March next year.
The Delhi-based Investor Protection Group (IPG) had filed a writ petition in the high court against the Commissioner of Police and EOW for not acting on their complaints against Religare Securities. The IPG alleged that Religare Securities had done some unauthorised trading without the consent of its clients to the tune of Rs200 crore to Rs500 crore.
Criticising the inaction of investigating authorities despite providing evidence, IGP, says that “interestingly, the victims themselves have brought the evidences that are deliberately not seen/ignored by the police. Some of the victims have carried out sting operations and made an audio-video recording of the racket that is being carried out, but the police are deliberately and intentionally not taking any action against the ‘powerful and influential’ brokerage”.
According to IPG, the brokerage is duping and defrauding people by carrying out trading without taking any instructions from its clients for earning more brokerages per transaction and the total amount of trading could be between Rs200 crore to Rs500 crore. Despite thousands of such complaints filed by number of investors across different police stations in the capital, no action was taken, the group claimed.
According to the petition, one such investor, Sunil Aggarwal lost Rs55 lakh because of the illegal trading that was carried out in his account by Harpreet Singh, an employee of Religare. Mr Singh is also a habitual offender and a case was registered against him while he was in India Infoline and yet he was never been interrogated by the police, the petition said.
Another person named Sachin Bhardwaj was allegedly defrauded by the brokerage by carrying out trading in his account, without his consent in derivative segment while he had chosen only cash segment. He was sent his account statements through e-mails and after tracking the IP address, it was revealed that the mails were sent from Religare servers. In other instances, people have complained about misuse of their power of attorney (PoA), where shares from their account were sold.
In one particular case, IPG alleged that Religare Commodities was involved in money laundering. “It was highlighted with evidence that different pay orders of about Rs11.36 lakh favouring Religare Commodities were issued by Standard & Chartered Bank and ICICI Bank given on behalf of Gaje Singh (proprietor) and duly credited to the company account. However, the entries were not shown in Mr Singh’s account but reflected in a third party account in the name of Punjab National Bank, which certified that it never issued the said drafts or pay orders. After that, the Forward Market Commission (FMC) held Rs11.36 lakh as security from the Religare’s account,” the petition stated.
Sachin Bhardwaj, honorary secretary, IPG says, “Religare is invading the right to privacy, a fundamental right to life under article 21 of the Constitution by not taking proper authorisation from its clients. The brokerage is secretly recording personal and private conversation it had with the client or any family member of the client after carrying out trading. It also fails to inform and warn them that their conversations are being recorded.”
Comparing the fraud to the Citibank scam, IPG in a statement alleged that, “Certain employees of Religare were found to be directly involved in cases of misappropriation of funds and doing discretionary trading in derivative and commodities to the tune of Rs500 crore, and yet there is no action against them. In the Citibank scam, the money was invested in Religare and the trading was done in derivatives with the brokerage being main beneficiary but Citibank employee was convicted in this case.”
Moneylife contacted Religare Securities proactively, with a press release and all other documents related to the issues which were sent by IPG.
Addendum - Religare on 23rd November 2011 replied to the query sent by Moneylife. Below is the official verbatim reproduced...
“We would like to emphatically state and go on record that this is absolutely baseless and untrue and an attempt to malign our corporate reputation. However, It has been brought to our notice that the honorable High Court has issued a notice to the Police Commissioner and EOW in response to a writ petition filed by a group of individuals. The petition though has been projected as public interest has been filed in vested interest mainly by those clients who are either pursuing or have exhausted their respective legal remedies by initiating proceedings conducted by the exchanges for redressal of their grievance through conciliation or arbitration mechanism. The matters pertaining to some of the Clients namely of Mr Sachin Bhardwaj are even currently pending with the arbitral tribunal, and are due for hearing in the next few days/weeks and in the news item statements have been given by the above vested interest with a view to overreach the due process of law after many of the above vested interest group members have either failed or finding it hard to prove their claim/case against Religare Securities Limited. It is evident that this action is an attempt to exert undue pressure on Religare Securities Limited so that it succumbs to the undue demands of people with vested interest. Religare Securities Limited strongly discourages such interpretation/ reportage that mislead our existing clients and public at large.”