Pune, July 1: The recent showcause notice of suspension issued by the Securities & Exchange Board of India (Sebi) to 24 brokers of the Pune Stock Exchange (PSE) continues to create ripples. Exchange brokers are still at sea over the implications of the directive, particularly when it comes to the fate of brokers who are members on both the PSE and NSE.

One section of brokers told The Financial Express that only those who trade on the same card on both the exchanges would be affected. These brokers point out that only Janhavi Investments, formerly Soumitra `Montu' Wardekar's firm and now taken over by former PSE president, Rajesh Kasat, trades on both in the same name and figures in the list of 24 brokers who have been issued notices by SEBI.

Other brokers differ. They have raised questions about Prateek which trades on the NSE as Prateek Stockvision and on the PSE as Prateek Investments. Pramod Shah said the showcause was issued to Prateek Investments but he was not sure if Prateek Stockvision would be allowed to trade. He pointed out that since he is a director of Prateek Stockvision as well, he could be debarred from trading even on the NSE. A final decision would be taken only after the meeting with the Sebi chairman, DR Mehta, slated for the third week of July.

Efforts to contact Kasat proved unsuccessful since he was in meetings followed by a trip to Mumbai.

While brokers are unanimous that Janhavi and Prateek represent the two big brokers at the PSE, one section is worried that should big brokers be suspended, an element of recklessness could enter their trading during the 21 days (from June 27) allowed by Sebi to answer the showcause notice. The reasoning is that an NSE card costs Rs 1 crore and should they be suspended for a year, it would represent a loss of Rs 50 lakhs as the cost of closure of the card. A longer period would mean that the entire Rs 1 crore is written off. With so much at stake, these brokers wondered what steps would be taken by the stock exchange authorities to avert recklessness in trading by those affected.

It may be recalled that Sebi conducted an investigation on charges of illegal `badla' at the PSE between November 1995-January 1996 in February 1996. It called for an explanation from brokers to which they subsequently replied. This was followed by an inquiry conducted by a Sebi official whose findings resulted in the showcause notice being served to the 24 brokers. These brokers have been offered one last appeal in the form of an individual appearance before the Sebi chairman from July 15 to July 18.

Meanwhile, in an official press release issued by the PSE, JL Wagh has informed the stock exchange officials of his inability to do business. He is among the 24 members served with a showcause notice of suspension.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.