The Hindu Business Line : Alliance Capital still has exposure in `Samir Arora stocks'

ONE year after he quit Alliance Capital, a couple of stocks that were identified closely with Mr Samir Arora, the heavy-weight fund manager who was pulled up by SEBI for insider trading, still find favour with the fund house. A number of funds managed by Alliance continue to have names such as Hinduja TMT and United Phosphorous in their portfolios.

Alliance Equity Fund, Alliance '95, Alliance New Millennium, Alliance Basic Industries and Alliance Capital Tax Relief '96 remain invested in one or both stocks in varied proportions.

Both Hinduja TMT and United Phosphorous were part of a group of stocks, investments in which were not adequately disclosed in the stipulated manner.

This group also included Balaji Telefilms, Mastek and, of course, Digital Globalsoft - involvement in which led to a prima facie case of insider trading.

The last available portfolios indicate substantial exposure to Hinduja TMT and United Phosphorous. Alliance '95, for instance, holds both stocks. In fact, United Phosphorous was one of the fund's top 10 holdings, accounted for by 1,49,883 shares commanding a market value of Rs 7.87 crore (as on June 30, 2004).

The scheme had 1,70,000 shares of Hinduja TMT, with a market value of Rs 3.43 crore. Alliance Equity, Alliance New Millennium (part of the MF's sector series) and Alliance Capital Tax Relief are invested in Hinduja TMT. The stock (part of a category called `broadcasting & cable TV') is one of the top holdings for Alliance New Millennium. Alliance Basic Industries, on the other hand, has an exposure to United Phosphorous, which is listed in a category identified as `fertilisers and agricultural chemicals.'

It may be recalled that Mr Samir Arora announced his resignation on August 5, 2003. It was initially alleged that he had "played a role in thwarting the sale of shares" of the asset management company by Alliance Capital Management of the US, the parent outfit. This led to the fall of the assets under management in India, which in turn resulted in a loss to investors.

Mr Arora was slapped a case of insider trading for his dealings in Digital Globalsoft.

The SEBI order also held him responsible for non-disclosures/wrong disclosures when the shareholding in the relevant scrips crossed five per cent of the equity holdings of the fund and the sub accounts managed by Alliance Capital of the US.

A string of developments followed - a personal hearing on August 28, 2003, a confirmatory order (restraining Mr Arora from dealing in securities) and an appeal before the SAT. A final order by SEBI on March 31, 2004, banned him for five years.

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Alliance Capital still has exposure in `Samir Arora stocks'