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Employee of India Infoline Ltd Alleged in a Cyber cum Financial Fraud
Indian Stock Markets have been raiding high in recent days with the index reaching record levels. Investors are bullish and more funds are expected to flow in. For all those investors who were battered and bruised during the great fall of the 90's triggered by what was called the "Harshad Mehta Scam", the current situation is a grim reminder of similar possibilities. Recently, SEBI has taken some measures to regulate the run away activities of unknown foreign hands in the Indian stock markets. This itself created a ripple which threatened to turn into a big destructive wave but was contained in time.
As the markets bounce back, there appears to a simmering volcano beneath the waves which can blow out any time and create a tsunami which could be sending the markets down crashing.
The indications are available in some of the complaints from investors that are trickling into to CCC_RAC (Cyber Crime Complaints and Resolution Assistance Center of Naavi.org).
These complaints indicate large scale investment frauds committed by a well known Investment broker and/or his employees. It also appears that this is not an isolated incident and is occurring with other brokers.
The tragedy is that the fraud is a combination of a Financial Fraud and a Cyber Crime and so complex that there is a danger of the fraud being suppressed under one pretext or the other.
It is therefore time for investors to be prepared for a major shake up in the markets like the one seen in the post Harshad Mehta scam expose.
The elements of the fraud are
a) The employees of a broker organization undertaking stock market operations on customer's account without authority
b) Overcoming the security check points by directing system generated alerts to false e-mail accounts and keeping the customers in the dark
c) When questioned, either persuading the customers that the money was lost in a genuine transaction or satisfying the customers with the return of the Principal amount and ignoring the profits which his funds had earned or had the opportunity to have earned.
d) Where required the accounts of the customers are fudged in the electronic form to give false or inconsistent statements of accounts to the customers
We have come across a few such incidents from Mangalore in which an employee of a well known broking firm India Infoline Ltd is allegedly involved. We also gather that there are many more victims in Mangalore who have suffered from the same broker firm. There are complaints of similar nature on other branches of India Infoline as well as a few other brokers.
Some of these complaints are resolved with a complaint to SEBI as a trading irregularity. While in certain cases, the victim may be happy with a settlement and return of his principal money invested, unless SEBI takes up the issue as a larger Simmering Investor Fraud, other investors will continue to be cheated.
This case now registered at Mangalore will be yet another challenge to the Karnataka Police since the case falls into two Police Station jurisdictions. While the Mangalore Police would be keen to handle this high profile case as a fraud under IPC the offence also attracts Section 66 (ITA-2000) which qualifies it to be called a Cyber Crime. This offence falls under the jurisdiction of the Cyber crime PS, Bangalore. Will the Mangalore Police handle the investigation with the assistance of the Cyber Crime P S or will the entire case be handled by the Cyber Crime PS itself? is the question to be resolved.
This sort of a dilemma is not a one off problem. It will recur in every case of a Fraud involving use of "Information Residing inside a Computer Resource". Sooner we solve this administrative problem, better it would be for the Cyber Crime victims of Karnataka. If this issue remains unresolved, it would be the offenders who can take advantage of the confusion. While the Jurisdictional Police may pursue the case with enthusiasm, they may stumble when it comes to presentation of digital evidence in the Court in a manner approved by ITA 2000, expertise of which largely falls under the Cyber Crime PS, Bangalore.
PS: We have tried to contact the top executives of India Infoline through their website contact page and await their reaction... Naavi
Naavi
October 31, 2007
