A 45-year-old Mumbai share-broker, Jatin S. Mehta, has been arrested for conducting fraudulent transactions worth over Rs. 4,600 crore ($619 million) through illegal ‘dabba trading’ activities between March and June this year. Mehta was taken into custody after a Crime Branch team raided his offices in Mahavir Nagar in Kandivali west.
‘Dabba trading’ refers to illegal trading in shares outside of the stock exchanges and without a valid license, using an application called ‘Moody.’ Officials estimate that the government has lost nearly Rs. 2 crore ($268,000) due to unpaid dues, such as capital gains tax, security transaction tax, stamp duty, SEBI, and stock exchanges dues and fees.
The police received a specific tip-off and had been monitoring Mehta’s activity before conducting the raid alongside NSE and MCX squads. The authorities believe that the broker committed the fraudulent activities by creating fictitious identities and conducting illegal transactions on behalf of his clients.
The arrest of the Mumbai broker has once again highlighted the need for stronger regulatory measures and stricter enforcement of existing rules in the Indian financial sector. The illegal activities carried out by Mehta not only caused massive losses to the government, but they also undermine the integrity of the stock exchanges and hurt the interests of legitimate investors.
The authorities must take swift action to prosecute the guilty parties, recover the lost funds, and prevent such illegal activities from happening in the future. Investors must be careful and vigilant when dealing with brokers and ensure they are licensed and regulated by the appropriate authorities.
