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Satyam fraud won’t be the last: SEBI

This article was posted on Jan 8, 2009 and is filed under Press Releases

New Delhi: The case of Satyam Computer is neither the first nor the last corporate fraud to have hit India but the investors should always be on guard and ask for more information before making any investment decision, former SEBI Chairman M Damodaran said on Wednesday.

At the same time, he cautioned authorities against giving corporate governance and rating awards to companies before they actually prove that they are practicing the same.

“The (Satyam) issue cannot be generalised. This is not the first corporate fraud nor it is going to be the last. But you cannot generalise it and throw the baby out with the bath water,” Damodaran said over the phone when asked about Satyam’s financial fraud entailing thousands of crore of rupees.

Pointing out that the people were taken in by the wrong numbers given by the company, he said people should always be on guard and ask more questions before making investment decisions.

Damodaran, who had upped the ante against TV anchors for hyping shares of particular companies, said “there is no correlation between share market trend and the wrong numbers that particular company gives. Some people have been taken in by the numbers given by the company and there is need to ask more questions and take more information.”

Asked what action he would have taken had he been the chairman of SEBI, he said: “It is hypothetical. I am sure authorities are doing whatever is needed.”

Satyam Computer bagged Golden Peacock Global Award for excellence in corporate governance for 2008.

Damodaran said, “I have always said don’t give a corporate governance award too soon…. But people have been in a bit too hurry to give both rating and corporate governance awards”.

Source: msn India

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