Mumbai, July 1: The National Stock Exchange (NSE) has filed a criminal complaint with the Mumbai police against Vipul Securities for allegedly introducing fake shares worth Rs 10 crore. The exchange has declared the firm a defaulter.

The amount is said to be the largest ever by an exchange member. According to sources in the economic offences wing of the Mumbai police, where the NSE complaint has been lodged, Vipul Securities had primarily sold these fake shares to foreign institutional investors (FIIs).

These FIIs, the names of whom were not disclosed, however, suffered no losses as the clearing corporation of the exchange picked up the loss.The first lot of fake shares introduced by Vipul Securities was detected by the exchange earlier this year. By March, the total amount of tainted shares introduced by the firm had gone up to Rs 4.1 crore.

At this point of time, however, Vipul Securities had assured the exchange of replacing these shares and had even deposited Rs 1 crore in cash and replaced another Rs 1 crore worth of shares.

Later, however, the number of fake shares introduced by the member swelled to Rs 10 crore and the exchange, failing to recover the amount from the firm, lodged a criminal complaint against the member.

"We are investigating the matter and hope to make a breakthrough in the case shortly," said an EOW source.

NSE officials declined to comment on the issue saying that details of the extent of default would be revealed at a later date. The NSE board, however, declared Vipul Securities a defaulter in its meeting convened on Tuesday.Four other securities firms were declared defaulters while another six were suspended from trading by the bourse authorities.

The previous largest case of default on account of introduction of fake shares was that of Balshia Securities whose default was to the tune of Rs 1.75 crore.

In fact, sources point out that the extent of default in the case of Vipul Securities could be one of the reasons for NSE authorities to take the controversial step of asking its members to furnish personal indemnity against defaults.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.