sebi:14996

SEBI · SEBI · 2002-11-27 · V.K. Chopra, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Show cause notice disposed of without imposing any penalty; broker exonerated from the charges

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 13(4)
• Reg. 4
• Reg. 6
• Reg. 4(b)
• Reg. 199

Parties

• M/s Herald Equities Pvt. Ltd

Holding

The broker, M/s Herald Equities Pvt. Ltd, was exonerated of charges of violating Regulation 4(b) and (c) of the PFUTP Regulations, 1995 and Regulation 7 read with Section A(3) and (4) of the Code of Conduct under Schedule II of the Stock Brokers Regulations, 1992, arising from alleged synchronized trades in Ranbaxy Laboratories Ltd shares, and the show cause notice was disposed of without imposing any penalty.

Full text

APPEARANCES Shri. Jugal K Bajaj, Director of M/s Herald Equities Pvt. Ltd Shri. Sunil C Gangan, Advocate Shri. Gaurav Joshi, Advocate FOR COMPANIES/ BROKERS: FOR SEBI Mrs Barnali Mukherjee, DGM, SEBI Shri Deepesh M.U, Manager, SEBI Shri Mohamed Rahaz. P.M, Legal Officer, SEBI

Registration No. INB031049738, in the shares of Ranbaxy Laboratories Ltd (hereinafter referred to in short as “Ranbaxy”). 1.2 The price of the scrip of Ranbaxy had moved up significantly from Rs.270/- in January 1999 to about Rs.1200/- in October 1999 accompanied with significant increase in volumes. The Board initiated preliminary investigation into the scrip in August 1999 considering the above major spurt in price and volumes traded in the Exchanges particularly on the Stock Exchange, Mumbai (BSE), National Stock Exchange (NSE) and Calcutta Stock Exchange (CSE). 1.3 The Board after considering the interim Report of the aforesaid Investigation, appointed an Enquiry Officer vide Order dated November 27, 2002 to enquire into the violations allegedly committed by the Broker under the provisions of the Regulation 7, read with schedule II, clause A(3) and (4) of SEBI (Stock Brokers and Sub-Brokers) Rules and Regulations, 1992 (hereinafter referred to in short as “Stock Brokers Regulations”) and the provisions of Regulation 4 (a),(b),(c) and (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 1995 ((hereinafter referred to in short as “PFUTP Regulations”) and Rules, Regulations and Byelaws of Stock Exchanges. 1.4 The Enquiry Officer, after conducting an enquiry in accordance with the provisions of Regulation 6 of the Securities and Exchange Board of India (Procedure for holding Enquiry by Enquiry Officer and imposi

2.0 SHOW CAUSE NOTICE 2.1 Pursuant to the receipt of the said Enquiry Report, a Show Cause Notice dated December 05, 2003 was issued to the broker, enclosing therewith a copy of the said Enquiry Report and advising him to show cause as to why the action, as recommended by the Enquiry Officer or any other appropriate penalty should not be imposed on him. The Broker submitted its reply to the said show cause notice, vide letter dated January 23, 2004. 3.0 REPLY OF THE BROKER 3.1 The broker stated that 6 out of a total of 10 transactions took place prior to September 14, 1999, the date on which SEBI issued its circular prohibiting negotiated deals. Therefore, the alleged violation in respect of the said 6 trades is not sustainable. 3.2 The Broker stated that as per the findings in the Enquiry Report an order of 50,000 shares out of a total of 1,49,000 shares (34% of the broker) was matched with one Dinesh Kumar Singhania who was associated with Ketan Parekh Group. The broker further stated that out of the aforesaid 50,000 shares, an order of 40,000 shares was executed on August 24, 1999 and an order of 10,000 shares was executed on October 15, 1999. Both these transactions were carried out prior to SEBI Circular dated September 14, 1999. Further, the broker submitted that there is no finding in the Enquiry Report showing their connection or linkage with the Ketan Parekh Group. 3.3 The Broker further submitted that all the trades executed by them were strictly in compliance with

Source: SecMarx — sebi:14996. 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.