sebi:15000

SEBI · SEBI · 2003-02-11 · V. K. CHOPRA, WHOLE TIME MEMBER

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Facts / Headnote

Minor penalty of censure imposed on the broker.

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 13(4)
• Reg. 4
• Reg. 3
• Reg. 6
• Reg. 4(b)
• Reg. 13(1)

Parties

• M/s Wallfort Financial Services Ltd

Holding

The broker violated Regulation 4(b) of the PFUTP Regulations and Regulation 7 read with Clause A(4) of the Stock Brokers Regulations by executing synchronised trades in Ranbaxy that created artificial volumes and a misleading appearance of trading. A minor penalty of censure was imposed.

Full text

Under Regulation 13(4) SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 1.0 Background 1.1 M/s Wallfort financial services Ltd, is a broker of National Stock Exchange (SEBI Registration no. INB230852430), Stock Exchange Mumbai (SEBI Registration no. INB 010852433), Calcutta Stock Exchange with (SEBI Registration no. INB030852439). Securities and Exchange Board of India (hereinafter referred to in short as “Board”) had conducted an investigation into the affairs relating to buying, selling and dealing in the shares of Ranbaxy Laboratories Ltd (hereinafter referred to in short as “Ranbaxy”) on observing sudden spurt in the price and volumes of Ranbaxy traded in the Exchanges particularly on the Stock Exchange, Mumbai (BSE), National Stock Exchange (NSE), Calcutta Stock Exchange (CSE). The price of the scrip of Ranbaxy had moved up significantly during the period from Rs.270/-in January 1999 to about Rs.1200/- in October 1999 accompanied with significant increase in volumes. 1.2 The Board, after considering the Investigation Report, appointed an Enquiry Officer vide Order dated February 11, 2003 to enquire into the violations allegedly committed by M/s Wallfort financial services Ltd (hereinafter referred to in short as “Broker”) under the provisions of the Regulation 7, read with schedule II, clause A(3) and (4) of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to in short as “Stock Brokers Regulations”

1.3 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 imposing penalty) Regulations, 2002 (hereinafter referred to in short as “Enquiry Regulations”) submitted a report dated August 11, 2004 under Regulations 13(1) of the Enquiry Regulations. The Enquiry Officer in his report observed that the broker had generated artificial volume in the scrip of Ranbaxy which amounts to misuse of trading system in terms of Regulation 4(b) of PFUTP Regulations and Clause A(4) of Stock Brokers Regulations. He recommended a minor penalty of warning to the broker. 2.0 Show cause notice 2.1 Pursuant to the receipt of the said Enquiry Report, a show cause notice dated September 24, 2004 was issued to the broker, along with a copy of the said Enquiry Report, advising the broker to show cause as to why the action, as recommended by the Enquiry Officer or any other action should not be imposed on it. In the said show cause notice, it was specifically stipulated that the broker’s explanation should be reached in SEBI within 15 days from the date of receipt of the said show cause notice and also advised it to indicate as to whether the broker is desirous of attending for personal hearing. The broker neither submitted its reply to the said show cause notice nor sought for a personal hearing. 3.0 Consideration of issue 3.1 I have carefully considered the fi

since the same were not covered under the Order dated November 29, 2002 appointing the Enquiry Officer. 3.2 The Enquiry Officer has also examined as to whether the trades executed by Wallfort are illegal and / or manipulative. He held that trades executed by the broker are in the nature of jobbing. During the enquiry proceedings, the broker has stated that in all except in one case, buy

Source: SecMarx — sebi:15000. 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.