Who better to investigate Insider Trading

Some things often are beyond my comprehension.

The AP police are making a mess of the Satyam investigation ( see my post Satyam Insider Trading dated 31 Jan 09 )

Its not clear to me if the cops are not fully aware of what Insider Trading is or are they just pretending to mislead the press and the public.

What is even more confounding is what the courts are not allowing SEBI the market regulator to interrogate the Rajus. This is a multi dimensional scam and every government agency has its needs and rights to investigate and prosecute.

Agreed that certain provisions of law does not permit a person under judicial custody to be investigated by all & sundry. But SEBI is not exactly all & sundry. They have a very important role of regulating the market and investigating and prosecuting offenders. This is precisely what they intent doing the Satyam and Raju. But then why .....

Satyam Saga Part VI - What next !!!

With 2 class action suits ( aka Mass Tort ) nobody will touch Satyam even with a barge pole. The breath and depth of the damages of the litigation is unpredictable. Most of the assets of the company are intangible. Also nobody know the extend of damage caused by Raju and his criminal chums. The kind of cases registered on Raju covers the entire major crimes in the Indian CrPC including forgery and use of forged documents. ( these are 2 different but related crimes )
With Mass Tort the awards to the ADR holders may be a few thousand dollars or a few million dollars each. Depending on how the courts in US treat this case which may take at least 2 years to end will be a traumatising wait. Satyam cannot survive so long which is for sure. GoI will not pump in any funds into Satyam since its unprecedented in independent Indian history. So this option is ruled out. But the 52 K employees and the shareholders of Satyam cannot be ignored atleast in the present economic circumstances.
The only viable & unvercelly acceptable solution will be for GoI to offer sovereign indemnity to possible suitors from the Mass Tort in the US and do a thorough due diligence and get any other respectable auditors arrive at a reasonable valuation for the company and palm it off to L & T Infotech.
L & T will not be a willing acquirer but a reluctant one since with all the damage to Satyam's reputation retaining employees and customers will be major challenge for the new owners. L & T will not merge Satyam with itself but will retain Satyam as a seperate company but as a subsidiary for a long while to come. A US $ 2 billion company merged with L & T will bring down the market cap for the parent i.e. L & T which nobody wants now. The saga continues.

Why Confess ?

Satyam Saga Part III
So you confess to come out in the clean. And will give you immunity against prosecution. No way. But then in this case Mr Raju confessed not to emerge clean or to unburden his consciences as reported by the press.
Boy its simple. His stake in the company has been reduced to about 3%. A hostile or friendly take over of management control is imminent. With such an event round the corner a due diligence is the first thing to happen & every thing will spill out. This eventuality is dreadful to say the least.
So Raju had no choice but to admit his sins.
Raju certainly has no criminal image now. And the powers that be in the state admin are in no hurry to act on him. This is clear. He may get off lightly which is distinct possibility.
Now to brass tacks. What will happen to Satyam ?. The GoI for a change acted right. There were no contradictory statements from various quarters. In fact there was a erie silence. But when the GoI acted they acted swift & decisive. Quickly they dissolved the board. Cancelled the scheduled board meeting and announced that the centre will appoint a set of 10 government nominees to the board as interim directors. This was smart and quick without the usual political rhetoric. And the statement that " employees and stakeholders interests are primary " was another unusual but appropriate response.

Satyam Story

First it was an attempt to acquire 2 companies owned by his sons. Then it was share buy back and finally its number fudging. Have all the skeletons tumbled out of the cupboard ? Looks like yes.
Seems unrelated events but bad timing right ?
Wrong.
See the tumbling of the events from the reverse.
There was figure fudging going on for a while. Which Raju was aware of. He tried to acquire Maytas for all the cash in the company not for the love of his sons or the promise of the infra biz. But simply to conceal the missing cash. In real estate its possible to conceal or reveal any amount of cash if you have a so called Land Bank. We all know real estate is the ultimate black money sink which is bottomless pit if you so prefer.
It appeared simple to acquire Maytas so records for payment of non existent funds can be created and Raju will never get caught. This back fired since US $ 1.6 was the total cash available and surprisingly the amount involved in the deal. Smells rat right ?
Right or wrong many factors like sons company , all the cash & wrong timing to invest in infra company all added up to a fateful week for Raju.
His game plan was OK. To clean up the books and save Satyam and himself. Had he tried to acquire a friendly accommodative IT company overseas and did that in multiples of US $ 300 to 400 millions over the next few years he could have accomplished the mission in installments but successfully. After all the fudging has been going on for 7 years. The sins of 7 years cannot be - more importantly - should not be cleansed in 1 go. That is the only goof up.
Better luck next time Raju ( if there is one )