New Delhi, Jan 06 (Agencies): In connection with the alleged Rs 300-crore Citibank fraud, Sebi is probing whether the stock brokers collected from the accused his income proof documents, a mandatory requirement for trade in derivatives market.

The market regulator had made it mandatory in December 2009 for the brokerage firms to collect income proof documents from all their clients before allowing them to trade in derivatives segment of the market.

Investigative teams from Sebi have already more than once questioned Puri as well as other parties connected to the fraud, including the officials from the bank and the two brokerage firms used by Puri -- Religare and Bonanza.

As per the preliminary probe, Sebi has found lapses on part of the brokerage firms in collecting all the required financial documents from Puri and others through whose accounts he invested in stock market, a senior official said.

The brokers have been asked by Sebi to furnish all the documents that they had collected from Puri, subsequent to which the regulator would check their veracity.

Most of these funds were invested into Nifty options – a derivative product with the market benchmark index Nifty as underlying security, where the investor has no obligation to take the delivery and needs to pay only margin money.

In this derivative, investors bet on upward or downward move of Nifty and returns depend on accuracy of such bets.

As the derivatives trade involve large-scale transactions, there are greater chances of black money or money earned through dubious means finding way to stock market through derivatives, the official said.

This was the reason behind Sebi in December 2009 making it mandatory for all the brokerage firms to allow their clients to trade in derivatives only after submission of valid income proof. In cases of discrepancies or the income profile not matching with the investment portfolio, the brokers are supposed to immediately inform the regulator.

Puri's police remand extended by 6 days

A city court on Thursday extended the police remand of Shivraj Puri, the main accused of the Rs 300 crore Citibank fraud case, by six days.

Puri was arrested last week in connection with the Citibank fraud at a local branch here and was sent on police remand for a week.

His remand was extended for another six days by a local court on an application by the police.