Price sensitive information about LIC block deals was leaked: EOW

The Economic Offences Wing (EOW) of the Central Bureau of Investigation (CBI) suspect that price sensitive information was leaked about block deals entered into by the Life Insurance Corporation (LIC) involving at least eight of the beneficiary companies named in the FIR of the multi-crore housing loan scam.

This was done in connivance with executives of public sector banks in order to rev up the stock value of their shares.   
Block deal is defined as a single transaction of a share lot of five lakh shares or of Rs5 crore, said an expert. 

Explaining the modus operandi employed by the suspects, CBI sources revealed that the planning about block investment made by LIC in the particular stock would be leaked by Naresh Chopra, secretary (Investment), LIC, to Rajesh Sharma of Money Matters (India) Pvt Ltd.

“The investment plans of the companies are meant to be kept secret as it involves the company’s strategic investment of the shareholder’s money,” a source said.      

Sharma, who was in close contact with Chopra, would then selectively pass on this price sensitive information to other market participants.

As the news of LIC, the single-largest insurance company, investing in these firms reaches the market, the value of their shares would increase and that would lead to huge profits in the stock market. “We have enough proof to back our claims,” said a senior CBI officer. 

On Wednesday, CBI claimed to have busted a corporate scam in which top executives of at least four public sector banks and a leading financial services firm are involved in swindling of crores of rupees.

The EOW officers who are investigating the case said that Money Matters India Pvt Ltd has been acting as mediators and facilitators for corporate loans. They would allegedly bribe the top officials of the public sector banks and financial institutions for facilitating large-scale corporate loans. This was apparently done in order to get the loans passed even when the corporates seeking such loans were not eligible for it.  

“We are also probing whether the loan amount which was sanctioned was used for any other purpose than what was mentioned at the time of seeking loan,” said another officer.