For years, he seemed to be the blessed one. The man who could do no wrong. Whose every prediction about the Indian stockmarket would come uncannily true. Who could unerringly catch companies in their early growth phase and cash in once the scrip zoomed. Most of the mutual fund schemes he managed earned over a phenomenal 30 per cent on an annual basis. His affable face gazed out of business magazines, his voice on the telephone as he sat in Singapore being interviewed by Indian news channels was almost a daily weather forecast for anxious investors and brokers.
And now the Securities and Exchange Board of India (SEBI) says Samir Arora could be a crook. The regulatory body feels there is a prima facie case against Arora, the former chief investment officer of Alliance Capital Management, for, among other things, insider trading and non-disclosure of information as required under SEBI guidelines. It has banned Arora from trading on Indian stockmarkets, alleging that "his conduct erodes investors' confidence and is detrimental to their interests as well as the safety and integrity of the securities market. His association in the securities market in any capacity is prejudicial to the interests of investors and the safety and integrity of the securities market."
Strong words, those. But what did Arora do? Or, what does SEBI think he did?
Any stockmarket rookie is always on the lookout for insider information so that he can parlay it into profits before the general investing population gets to know of the development. For a big investor with deep pockets who gets to know price-sensitive critical information in advance, it means big bucks. Buy low when the news isn't out yet, watch the price shoot up once everyone comes to know, and then make a neat lucrative exit. SEBI believes the stellar returns that Arora's funds gave their investors were to a...