Indian police said they arrested stock analyst Nitin Mangal on charges of extortion and forgery related to a report he wrote for Veritas Investment Research Corp. of Canada in 2012.
Mangal, who no longer works for Veritas, is in police custody after Indiabulls group alleged that he demanded $50,000 to withhold an unflattering research report, Rani Devi, the chief of the Udyog Vihar police station in Gurgaon near New Delhi, said by phone Thursday. Amit Dube, Mangal’s lawyer, denied the charges and said Indiabulls is harassing his client for doing his job.
In a report published by Toronto-based Veritas on Aug. 1, 2012, Mangal and Neeraj Monga recommended selling shares in all Indiabulls group companies, citing a lack of disclosure and corporate governance. A week later, Indiabulls said in a statement that it would press criminal charges against the authors for publishing incorrect information.
“The sole purpose of Indiabulls Real Estate is to bilk institutional and retail investors for the benefit of select insiders,” Monga and Mangal wrote. “The controlling shareholders are running the organization as a piggybank, while proclaiming propriety and espousing credibility.”
Indiabulls said on Aug. 8, 2012, that the Veritas report was “an intentional act for profiteering.”
Indiabulls Real Estate Ltd. rose 1.8% to 79.65 rupees as of 11:28 a.m. in Mumbai. Its shares have climbed 40% since the publication of the Veritas report.
Mangal’s contract with Veritas as a consultant ended earlier this year, Dube said.
Research Activity
“My client is being harassed and made an example just to destroy independent research activity in the country,” he said.
Mangal’s arrest was first reported by India’s Economic Times newspaper Thursday.
Indiabulls has also pressed charges of extortion, intimidation, forgery and criminal conspiracy against Monga and Veritas, Dube said.
John Archibald, a lawyer representing Veritas and Monga in Toronto, declined to comment in an e-mail Thursday, citing the separate legal action by Veritas and Monga against Indiabulls in Ontario. Monga, who is based in Toronto, no longer works at Veritas.
Veritas and Monga filed their claim against Indiabulls Real Estate and Indiabulls Housing Finance Ltd. on Aug. 5 this year in Ontario alleging libel, conspiracy and the infliction of economic harm and seeking $11 million in damages.
Counter-Suit
Indiabulls said in an e-mailed statement Thursday that it had filed a counter-suit in New Delhi and that Veritas and Monga failed to appear before that court despite having had notices to do so served upon them. Indiabulls did not comment on Mangal’s arrest.
In September 2011, Monga recommended selling shares of Kingfisher Airlines Ltd. The carrier, founded by Vijay Mallya, stopped flights the following year after losses widened amid mounting debt. The Bombay and National stock exchanges on Nov. 8 said trading in the stock will be suspended starting Dec. 1.
On March 1, 2012, Monga and Mangal recommended selling shares of DLF Ltd., India’s biggest developer by market value, calling it a “crumbling edifice.” DLF has since declined 32%, data compiled by Bloomberg show. Sanjey Roy, spokesman at the New Delhi-based company, declined to comment.
In June 2012, they advised investors to sell shares of Reliance Communications Ltd. The stock has gained 64 percent since the recommendation.
Indiabulls Group has a networth of 133.9 billion rupees ($2.2 billion) and is into financial services and real estate, according to its website.
Bloomberg.com
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