Citibank fraud: Sebi, RBI join hands to investigate Citi fraud

Capital market regulator Sebi and the Reserve Bank of India (RBI) are working together to investigate the Rs 300-crore Citibank fraud, a top official said on Friday.

“The co-ordination has been happening between RBI and Sebi and the regulators are working jointly to understand what went wrong,” KM Abraham , whole-time member with the securities market regulator said.

“I suppose we will have a lot of lessons to learn from this (Citi fraud). There is somebody who is making investment decisions on behalf of investors,” he added.

Shivraj Puri, a relationship manager with Citibank’s Gurgaon branch, has been accused of siphoning off the money from rich clients’ accounts.

Mr Abraham said the investigation capabilities of Sebi have been ‘fairly sharpened’. “Investigation as a process has to adapt to the changing environment. Sebi is now in a much better position to investigate such frauds,” he said. “The regulator has to learn a lot more to stay ahead of people who would perpetrate fraud,” added.

A part of the funds involved in the Rs 300 crore fraud at Citibank, allegedly masterminded by employee Shivraj Puri, was pumped into the real estate sector, sources said. Investigations into the fraud have revealed that Puri invested a part of the funds in property, police sources said, adding that the amount was small, compared to the money that went into the stock market. Puri, the relationships manager with Citibank, is reported to have paid token money to real estate companies for buying properties.