Edelweiss at 5% LC

Edelweiss Financial Services today opened itself almost 5% down, quickly going on to hit the 5% LC of the day at Rs.80.20.

The stock tanked after Moneycontrol broke a story stating that the Ministry of Corporate Affairs (MCA) has ordered an inspection of the books of Edelweiss Asset Reconstruction Co (EARC) after a whistleblower wrote to the Prime Minister’s Office (PMO) and the Reserve Bank of India (RBI) alleging fraud at the firm.

The report states that Paras Kuhad, a former additional solicitor general of India and 14% shareholder in EARC along with his family, has alleged that controlling shareholders diverted at least Rs 1,800 crore from the asset reconstruction firm; the company has strongly denied any wrongdoing.