Mumbai: The Central Bureau of Investigation (CBI) has arrested Ketan Sheth, promoter of Gilt Edge Securities, in connection with the government securities scam. Investigative agency sources say Sheth surrendered to the CBIs banking, securities and fraud cell here. Sheth was produced before the court on 15 May.

Sheth, along with Sanjay Agarwal of Home Trade Ltd, reportedly duped several cooperative banks and the Seamens Provident Fund (SPF) of about Rs 400 crore. As the probe widens, the sources say, the involvement of more entities might come to light.

The sources add that the interrogation of Sheth is in progress and he has given them information about several things, which could not be disclosed at the moment. Investigators believe he is the link between the now-displaced SPF commissioner Arun K Gond and Agarwal. He reportedly introduced the two to each other.

Gond is in CBI custody in Mumbai and Agarwal is with the state CID in Nagpur. The state CID had, on 3 May, arrested Sunil Kedar, the chairman of Nagpur District Central Cooperative Bank, reportedly the worst hit of all the banks, for colluding with rogue operators and causing a loss of about Rs 125 crore to the bank.

According to sources, Sheth and Agarwal, as brokers, took money from the cooperative banks and SPF for purchasing gilts. They, however, never delivered the securities to their clients. Allegedly, the fraud was committed in collusion with the top officials of the banks and the SPF commissioner.