sebi:15132

SEBI · SEBI · 2006-03-29 · V. K. CHOPRA, WHOLE TIME MEMBER

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Facts / Headnote

Major penalty imposed: suspension of certificate of registration of the Broker for a period of one year

Provisions invoked

• s. 19

Regulations

• Reg. 13(4)
• Reg. 3
• Reg. 6(d)
• Reg. 6
• Reg. 5
• Reg. 3(i)
• Reg. 17(1)(j)
• Reg. 17(1)(d)

Parties

• M/s Jhunjhunwala Stock Brokers Pvt. Ltd.

Holding

The Broker M/s Jhunjhunwala Stock Brokers Pvt. Ltd. was found to have violated Regulation 6(d) of PFUTP Regulations, Regulation 17(1)(j) of SEBI Stock Brokers Regulations, and two SEBI circulars, and a major penalty of suspension of its certificate of registration for one year was imposed.

Full text

APPEARANCES: FOR BROKER: Shri. Vinay Chauhan, Advocate Shri. Suresh Kumar Jhunjhunwala Shri. Rajendra Prasad Jhunjhunwala FOR SEBI: Shri. Sanjiv Dutt, CGM, SEBI

1.2 In the course of investigation, it was noticed that the Broker had traded in the shares of TFL based on unpublished price sensitive information received from Shri. D. Pendse, the then MD of TFL. Further, in respect of the trades executed between the Broker and his associated entities like Anjudi Properties Investment Pvt. Ltd., it was revealed that contract notes were not issued in proper manner by the Broker. 1.3 The Board after considering the Investigation Report appointed an Enquiry Officer to enquire into the violations allegedly committed by the Broker under the provisions of Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to in short as “Stock Brokers Regulations”), Regulation 3(i) of Securities and Exchange Board of India (Insider Trading) Regulations, 1992 (hereinafter referred to in short as “Insider Trading Regulations”), Regulation 6(d) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 (hereinafter referred to in short as “PFUTP Regulations”), Securities and Exchange Board of India Act, 1992 (hereinafter referred to in short as “SEBI Act”) and Memorandum and Articles of Association of the Company, Regulations and Bye-laws of BSE. 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 Enqui

suspension of certificate of registration of the Broker for a period of two years. 2.0 SHOW CAUSE NOTICE 2.1 Pursuant to the receipt of the said Enquiry Report, a Show Cause Notice dated April 13, 2006 was issued to the Broker, enclosing therewith a copy of the Enquiry Report advising him to show cause as to why the action as recommended by the Enquiry Officer should not be imposed on it. The Broker submitted its reply dated June 30, 2006 to the show cause notice and also requested for a personal hearing in the matter. 3.0 REPLY OF THE BROKER TO THE SHOW CAUSE NOTICE 3.1 The Broker stated that the delay in proceedings as a result of adjournment sought by us was unavoidable and due to factors beyond our control and as such, no adverse inference can be drawn against them. 3.2 The Broker submitted that the Enquiry Officer has failed to appreciate the facts and circumstances and the submission made by them during the hearing on January 02, 2006, leading to the admission of backdated of contract notes by its erstwhile director. In this regard, they submitted that Shri. Rajendraprasad Jhunjhunwala, its erstwhile director, was in charge of day to day affairs of the company and solely responsible for the day to day business decisions of the company at the relevant time. Since he was fully conversant with the facts of the case, they had vide letter dated December 20, 2005 inter alia requested him to attend the enquiry proceedings before the Enquiry Officer on January 02, 2006.

Source: SecMarx — sebi:15132. 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.