Investors demand CBI probe in Reliance Power IPO Scam both pre and post listing

Released on: February 13, 2008, 12:21 pm

Press Release Author: Dev Ghosh

Industry: Financial

Press Release Summary: SEBI sleeping over the entire issue as Reliance Mutual Fund
indulged in huge sales in the initial few minutes on Reliance Power counter on the
listing day

Press Release Body: Investors demand CBI probe into the entire Reliance Power IPO
before and after listing episodes. SEBI sleeping over the entire issue as Reliance
Mutual Fund indulged in huge sales in the initial few minutes on Reliance Power
counter on the listing day

Contrary to popular perception created by Business Channels, the parties responsible
for Reliance Power debacle on listing seem to be the company circles and mutual fund
owned by the company circle as per the well known sources who know how the large
business groups operate.

As per the information available with Federation of Small investors, an apex body of
investors across the country, Reliance Mutual Fund owned and operated by ADAG -Anil
Dhirubhai Ambani Group sold 40 lakh shares in the first few minutes of the listing
of the Reliance Power shares on BSE and NSE.

As per market experts, such large number of shares sold by promoter owned Mutual
fund created a panic that resulted in the price of the Reliance Power shares falling
by more than 17% on the listing day making it the first company in Reliance group to
trade below the issue price on the day of listing.

While asking for the reasons to press such large sales by company circles themselves
on such a prestigious issues, market experts are completely confounded. Not a single
expert can remember a case where the company circle themselves are responsible for
pressing large sales and creating a panic on the counter that is getting listed on
that day. Market experts are at a loss to figure out the reasons for such a strategy
by the biggest bull operator in the Indian market in last five years - ADAG group.

One of the possible reasons given is that the world markets had gone down by more
than 20-30% between the date of the issue and the listing, if promoter group has
tried to maintain the prices at promised Rs. 900-1000 during the pre-IPO marketing,
they would have come in to huge losses and therefore to not incur such losses, the
promoter group might have decided to enter in to such heavy sales to bring down the
price of the shares themselves.

Most market participants are however, not willing to believe that any promoter
group, let alone a reputed group like Reliance would indulge in these type of
activities despite suffering sharp losses.

Many investors and HNIs who have suffered heavy losses in grey market are now asking
for a SEBI inquiry in the entire episode of bringing down the prices on listing by
promoter group itself. If found to be true, this would be in explosive situation
which will have long term repercussions on Reliance group which has overwhelming
presence in Indian market and also the nexus between promoters of companies and
mutual funds. The role of SEBI, Ministry of Finance, Prime Minister\'s office and
several opposition leaders would also come in to question in allowing this shady
issue to come up at very high premium and then allowing promoters to hammer the
prices on the listing day.

It is also said by informed sources that before the end of the day, Reliance Mutual
Fund squared off its sales by buying back the sold shares so as to not live any
trace on the depository transfers. However, broking circles are agog with rumours of
the transactions of more than 40 lakh sales of Reliance Power and then subsequent
buying of 40 lakhs shares at much lower prices thus creating a neat profit even in a
panicky market for promoter group of Reliance Power.

On the same day, to create further panic, it is said that Reliance Mutual Fund sold
more than 16 lakh shares of RCOM, 9 lakh shares of RIL and 13 lakh shares of IDFC.
These are all pivotal counters and by pressing large sales on them, many people
believe, the sellers were able to create panic across the broader range of market.

A complete investigation in a transparent manner can only solve this puzzle that has
confounded several pundits and brought millions of investors on the verge of
bankruptcy. The anger of investors, it is believed, would affect their perception of
government complicity and the roles of the government machinery creating
perceptional problems for the ruling coalition in the forthcoming general elections
towards this year end. Of course, the political circles on the ruling party and the
opposition parties who helped bring this issue out, would like to believe that one
year is a long time and the memory of Indian public.

Web Site: http://

Contact Details: Dev Ghosh, New Delhi

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