New Delhi, July 16: Multiple agencies will probe a humongous scam that has gone unnoticed in all these years. The Dabba Trading Scam which runs into nearly Rs 3,000 crore is being probed by the SEBI, Income Tax Department and also the Central Bureau of Investigation.
For starters a Dabba Trader is one which is carried out illegally outside the purview of the market regulator. In a legal transaction, the transaction gets executed on the exchanges.
However in Dabba trading the the transaction exists only on the books of the dabba trader. Such trading has been declared illegal by the Forward Contracts (Regulation) Act.
Unearthing a multi crore scam:
There were a series of raids that were conducted yesterday at Mumbai and Nagpur by the SEBI and the Income Tax department. The raids led to the arrests of three persons apart from various incriminating evidence being seized. Laptops and diaries with entries were also taken into possession and the same is being verified.
Similar raids are expected to be conducted in Gujarat and Uttar Pradesh as well where Dabba trading is a flourishing business. The agencies part of the probe say that the scam runs into nearly 3,000 crore. The raids conducted yesterday have brought to light that transactions worth Rs 100 crore were being undertaken.
Investigators say that several more agents will come under the scanner. Investigators will also look into the stock exchanges to see if there was any insider help. Most of these transactions could not have taken place without insider help, an officer informed OneIndia.
How Dabba traders operate:
The Dabba trader sets up an office like any other stock broker would do. For names sake he would have terminals in the office that would show the stock market rates.
The only difference is that the trades that take place are never executed in the stock exchange. All the trades are executed only on the diaries of the dabba trader.
The operator does not operate as an agent of the client but as the principal to all the traders. The operation involves a trade that is kept within the books of the operators.
Yesterdays raid revealed that there were no written contracts and bills were not issued. The agencies are now planning on booking criminal charges against these persons.
However the investigators are trying to clean up the mess by going right up to the top and finding out who from within the exchanges is helping this multi crore scam flourish.
Considering Dabba Trade as a flourishing illegality, the SEBI had decided to hold training programmes for the local police.
It is necessary that the local police keep a tab on such activities, a SEBI official said. Recently the SEBI officials held discussions in Gujarat considering the high volume of Dabba Trading.
SEBI also held talks with the state government and police officials seeking their assistance in acting against such traders. It has also collaborated with the police departments of several states to address this issue. SEBI also plans on holding several interactive seminars in this regard.
Oficials say that there is a need to continue with training programmes for police personnel so that they are able to track and bust such centres.