sebi:10483
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Facts / Headnote
Certificate of registration No. INB 230638130 suspended for 12 months from 14.07.2003
Provisions invoked
- s. 4(3)
- s. 370
Regulations
- Reg. 7
- Reg. 199
- Reg. 5(1)
- Reg. 13(2)
- Reg. 6
- Reg. 13
- Reg. 13(4)
Parties
- M/s. First Custodian Fund (India) Limited
Holding
The Chairman of SEBI held that First Custodian Fund (India) Limited violated Clause B(1) of the Code of Conduct (by entering into non-arbitrage transactions and delaying payments) and Clauses A(1), (3) and (5) of the Code of Conduct along with Regulation 6(a) and (d) of the PFUTP Regulations (by issuing fictitious contract notes), warranting suspension of its certificate of registration for 12 months from 14.07.2003.
Full text
Background M/s. First Custodian Fund (India) Limited (hereinafter referred to as "the said broker") is a member of National Stock Exchange , Mumbai (hereinafter referred to as "NSE") and a stock broker registered with SEBI under certificate of registration bearing No. INB 230638130. The Reserve Bank of India (hereinafter referred to as RBI) vide their letter dated 27.4.2001 informed the Securities and Exchange Board of India (hereinafter referred to as ‘SEBI") that M/s. Nedungadi Bank Ltd. (hereinafter referred to as "NBL") had approved in September, 1999, a scheme for arbitrage dealings through three stock brokers viz. Harvest Deal Securities Limited, Shrikant G. Mantri and the said broker. Based on the complaint from RBI, SEBI conducted an investigation into the matter. The findings of the investigation are as under : Shri Rajendra K Banthia (hereinafter referred to as "R K Banthia"), Managing Director of Harvest Deal Securities Limited and persons associated with him held 8.41%, the said broker held 3.28% and Shrikant G. Mantri held 10.51% of the equity shareholding of NBL the Board of Directors of NBL in its meeting held on 26.6.1999 took the following decisions : To allow purchase and sale of shares in various markets and stock exchanges. To vest to Chairman and General Manager (P&D), powers to the extent of Rs.5.00 crore and Rs.2.00 crore respectively to purchase and sell shares to the stock brokers namely Shrikant G. Mantri, Harvest Deal Securities Ltd. and the said br
To permit Chairman to ratify loss, if any, in any transactions upto a maximum of 5% of the price. To permit the bank to open DP accounts with Standard Chartered Bank and Global Trust Bank, Mumbai. Even prior to the aforesaid decision of the Board of NBL, the bank had allowed the said three stock brokers to undertake the following transactions: Date Purchase in Rs. Sales in Rs. Gross Income in Rs. 14.09.99 1,90,17,389 1,92,03,740 1,86,351 20.9.99 4,45,15,443 4,48,51,270 3,35,827 21.9.99 2,15,67,8665 2,17,94,508 2,26,643 As per the decision taken by the Board of NBL in its meeting held on 26.6.1999, the following reporting system was decided to be followed in respect of the arbitrage transactions: Sr.No. Particulars By whom To whom Periodicity
2. -do- Assistant General Manager(F&A) The Chairman through General Manager(P&D) -do- 3. Purchase and sale statement Chairman The Board Monthly
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Source: SecMarx — sebi:10483. 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.