sebi:10490

SEBI · SEBI · 2001-04-27 · G.N. Bajpai, Chairman

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Facts / Headnote

Certificate of registration bearing No. INB 010985237 granted to M/s. Harvest Deal Securities Ltd. suspended for a period of 12 months from 14.07.2003.

Provisions invoked

• s. 4(3)
• s. 370

Regulations

• Reg. 7
• Reg. 199
• Reg. 13(2)
• Reg. 13(4)
• Reg. 13

Parties

• M/s. Harvest Deal Securities Ltd.

Holding

The Chairman of SEBI held that Harvest Deal Securities Ltd. violated Clause B(1) of the Code of Conduct (Schedule II to the Broker Regulations) by delaying payments to NBL, and also violated SEBI's client registration circular, warranting suspension of its certificate of registration for 12 months from 14.07.2003. The broker was, however, held not to have acted beyond the mandate given by NBL.

Full text

Background M/s. Harvest Deal Securities (hereinafter referred to as "the said broker") is a member of The Stock Exchange, Mumbai (hereinafter referred to as "BSE") and a stock broker registered with SEBI under certificate of registration bearing No. INB 010985237. 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. The said broker, Shrikant G. Mantri and The First Custodian Fund (India) Ltd. 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 the said broker and persons associated with them held 8.41%, M/s. First Custodian Fund (India) Ltd. 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 First Custodian Fund (I) Ltd. Shrikant G. Mantri and Harvest Deal Secu

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

Source: SecMarx — sebi:10490. 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.