The Hindu Business Line : 4 entities issued show cause notices for May 17 stock crash

FOUR entities have been issued show cause notices with regard to their activities on May 17, 2004, which led to the biggest ever single-day crash in the stock market, according to the Union Finance Minister, Mr P. Chidambaram.

The names of these entities could be obtained from the Securities and Exchange Board of India (SEBI), he told newspersons at the sidelines of a function at the BSE on Friday.

However, Mr G.N. Bajpai, Chairman of the SEBI, refused to reveal the names of these four entities that are being questioned about their trading activities on what is now termed "Black Monday".

"He (Mr Chidambaram) said that the regulator can give (the names of these entities), but I have a philosophical issue on this. I have never mentioned to the media the name of an entity that we are investigating or proposing to take action against, until investigations are complete," said Mr Bajpai.

On May 17, the market witnessed an unprecedented selling frenzy and the Sensex lost 842 points intra-day. Market-wide circuit filters came into effect twice during the day and trading had to be halted for over two hours.

Though, subsequently, the indices regained marginally, the bourses ended the day with a loss of over 11 per cent, wiping out Rs 2 lakh crore of market capitalisation.

Ever since, the SEBI has been collecting data and investigating reasons for the crash.

On October 30, Mr Chidambaram had announced that the SEBI's report on the crash of May 17 was "nearly ready and would be published in a few days".

However, the contents of the report are yet to be made public.

Mr Bajpai refused to give an expected date of publishing the final orders in this matter.

He said that the parties have been given time to respond and even the nature of these entities' actions would be revealed only when the final order is passed.

On the market slide earlier this week, Mr Chidambaram said that he was not responsible if markets go down or up.

"The market movement over the last two days is quite orderly and hence, there is nothing to worry about. I think it is a market correction after the rather giddy rise over the previous few days."

However, earlier in the morning, Mr Bajpai had said: "The (market) movement is unusual compared to what has been happening in the last couple of weeks."

Mr Chidambaram said that he does not have to "agree or disagree" with what the SEBI Chairman said.

Mr Bajpai added that the market was based on the fundamentals of the economy, adding that the SEBI was watching the market movement very closely.

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