sebi:10359

SEBI · SEBI · 2005-08-28 · G. Anantharaman, Whole Time Member

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Facts / Headnote

Interim ex-parte directions issued prohibiting DKM and GFPL and its directors from dealing in securities, directing freezing of demat and trading accounts, and directing SMC/SAM to review systems and confirm compliance within 15 days.

Provisions invoked

Regulations

Parties

Holding

SEBI passed an interim ex-parte order prohibiting Shri Dheeraj Kumar Madaan and M/s Ganpati Finsec P. Ltd. (and its directors) from buying, selling or dealing in securities, directing NSDL/CDSL and India Bulls to freeze their demat and trading accounts, and directing SMC/SAM to review their systems and confirm compliance within 15 days.

Full text

1.1 SEBI received a complaint dated 28.8.2005 from Abohar Investor Forum (hereinafter referred to as AIF) from Abohar, District Firozepur, Punjab alleging the following: · misappropriation of shares and funds of small investors by one Shri Dheeraj Kumar Madaan (hereinafter referred to as DKM) , Proprietor of M/s Digital Stocks, having its address at 3, Circular Road, Mawa Market, Abohar, District Ferozepur (Punjab). · that DKM was an associate of M/s Ganpati Finsec P. Ltd., who was a sub-broker of SAM Global Securities Ltd. (member BSE). · that DKM had absconded on 30th June 2005 with investors’ money. 1.2 AIF further informed that it had contacted Ganpati Finsec P. Ltd (GFPL) and SAM Global Securities Ltd. for redressal of investors’ grievances, however no action had been taken by them. Meanwhile, SEBI also received another complaint dated 20.8.2005 from one Smt. Santosh Kumari (an Abohar based investor) alleging that DKM had absconded with her money/ shares. She also provided a statement of account stated to have been issued by Digital Stocks. Earlier, AIF had named Smt. Santosh Kumari also as an investor registered with it. Additionally, there were widespread media reports highlighting the fact that DKM had run away with huge money/ shares of investors. 1.3 The allegations made in the complaints were examined by SEBI. The representatives of AIF were called to the Northern Regional Office of SEBI at Delhi on 05.09.05 and 12.09.05 for further inquiries and information. A sta

recorded on 13.09.05 and 14.09.05. Independent enquiries were also made with Ludhiana Stock Exchange, Stock Holding Corporation of India Ltd. (SHCIL) Mumbai and India Bulls Securities Ltd., New Delhi. (hereinafter referred to as India Bulls). A preliminary investigation into the matter was conducted. The findings of the

dated 1.9.2005. SAM’s representative also visited Abohar on 8th September 2005 and received claims of aggrieved investors. Ø SMC has subsequently informed that it had suspended all the trading IDs of its NSE terminals located in Abohar. Further, SAM had informed that it had frozen the demat account of DKM with it. Ø After DKM became untraceable, AIF had advertised in local newspaper asking investors to register with AIF. 59 investors have made a claim of around Rs. 50 lacs with AIF. 2.2. Preliminary inquiries made by SEBI revealed that DKM/ Digital Stocks have the following demat accounts: Sl. No. DP beneficiary account no. DP Code Depositary DP name 1 10170216 IN 302236 NSDL India Bulls Securities Ltd. 2 1201911100006275 - CDSL SAM Global Securities Ltd. 3 1601010000026460 - CDSL Stock Holding Corp. of India Ltd. It further emerged that despite the reports that DKM had run away with investors’ funds/shares on 30.6.2005, he continued to be actively involved in securities business, as is apparent from the following - · Transaction statement with SHCIL showed that DKM had transferred some shares from his DP account on 12/13.9.2005. It has been learnt that these transfers

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Source: SecMarx — sebi:10359. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.