Stock trade scandal in India claims Dubai figure

The president of a Dubai-based investment bank has stepped down after becoming embroiled in an Indian stock trading scandal.

The DFSA has now stripped Arun Panchariya of his licence to act as a company director. Jeff Topping / The National

The president of a bank based in Dubai has resigned and his licence has been revoked by a financial regulator in the emirate after he became embroiled in a stock trading scandal in India.

Arun Panchariya, the president and a board member of Euram Bank Asia, a bank based in the Dubai International Financial Centre (DIFC), has resigned.

He stepped down after being named in a high-level investigation by the Securities and Exchange Board of India (Sebi) into an "elaborate scheme to manipulate markets" run by banks, brokerages and funds over two years.

Mr Panchariya and his company Pan Asia Advisors have been barred from dealing in shares or offering financial services in his home nation after Sebi discovered irregularities involving share listings of Indian companies on Luxembourg's stock exchange.

"The preliminary findings … leads to the conclusion that there is a prima facie case for Sebi to intervene immediately to prevent grievous injury to shareholders," the Indian regulator said in a 44-page report.

Euram Bank Asia, a joint venture between Pan Asia Advisors and Austria's European American Investment Bank (Euram Bank), has not been named in the Sebi investigation.

A senior executive at Euram Bank Asia, who wished to remain anonymous, said that after the contents of the Indian report were made known, the bank approached Dubai's financial regulator - the Dubai Financial Services Authority (DFSA).

The regulator has now stripped Mr Panchariya of his licence to act as a company director, with a DFSA spokeswoman saying he was "no longer a DFSA-licensed individual".

"We view any misconduct in another jurisdiction as a serious matter and relevant to the discharge of our own responsibilities when licensing new firms or supervising existing authorised firms, and we take appropriate action to protect users and prospective users of the financial services industry in the DIFC," she added. "Protecting the reputation of the centre is our top priority."

The Euram executive said Mr Panchariya had decided to resign as president of the bank and a member of the board.

"The board has accepted his resignation," the executive added.

Mr Panchariya could not be reached for comment.

Sebi's investigation centred on sales of global depository receipts, or GDRs, which represent multiple shares on foreign exchanges, and 17 companies with links to Mr Panchariya.

The Indian regulator became concerned when large numbers of GDRs of Indian companies listed in Luxembourg were converted into shares and flooded the Indian market soon after the listings had taken place.

Pan Asia Advisors and Euram Bank, based in Vienna, managed sales of GDRs in at least six Indian companies. In many cases, the issuances were purchased by companies linked to Mr Panchariya and his brother Satish, who was also a director of the Dubai bank until January, Sebi said.

In a separate matter, Satish Panchariya resigned in January after being fined, along with his brother, by the Indian regulator last year after they "allegedly caused misleading publication of favourable news in the media", Sebi said.

Euram Bank has also been banned from dealing in securities in India but has vowed to fight the ruling.

"Euram Bank AG, Vienna, will contest the order, as the allegations against Euram Bank AG appear unfounded," said Viktor Popovic, the bank's chief executive.