The Hindu Business Line : 2004 crash: Goldman Sachs gets clean chit

Mumbai, Jan. 1 Goldman Sachs has been given a clean chit by SEBI in the inquiry held to investigate its alleged role in the stock market crash on May 17, 2004.

The SEBI order said no adverse finding was recorded in the adjudication proceedings against the foreign institutional investor and, therefore, no penalty is warranted.

The investigation was held to find whether Goldman Sachs had failed to comply with the ‘know-your client’ requirement and submit client details to SEBI and if it had indulged in short selling in the shares of Dredging Corporation of India (DCI).

In his findings, the adjudicating officer has noted that Goldman Sachs had cooperated with SEBI in seeking information from its clients and had not furnished any misleading information nor had hidden any such information.

With regard to the short selling in DCI shares, it was found that the transaction was an entry error by its broker, Kotak Securities, and not a short-sale, and that the error was immediately corrected, the order said.

During the preliminary investigation conducted by SEBI to probe the market crash, it was found that Goldman Sachs through its proprietary sub-account of Goldman Sachs Investment (Mauritius) Ltd was among the top 10 FIIs which had traded on May 17. It had purchased shares worth Rs 49.32 crore, while selling shares worth Rs 162.75 crore.

Besides, it had also traded in shares of ONGC, Wipro, HCL and Tata Motors, which had shown major volatility.