sebi:15307

SEBI · SEBI · 2004-03-19 · Madhukar, 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

Minor penalty of 'Censure' imposed against M.J. Shah and Co.

Provisions invoked

• s. 19

Regulations

• Reg. 13(2)
• Reg. 13(4)
• Reg. 5
• Reg. 15

Parties

• M.J. Shah and Co.

Holding

SEBI imposed a minor penalty of 'Censure' on the sub-broker M.J. Shah and Co. for violating Clause A(2) of the Code of Conduct (Schedule II read with Regulation 15 of the Stock Broker Regulations) by failing to exercise due care and caution while executing trades in an illiquid scrip showing abnormal price movement.

Full text

2. SEBI conducted an investigation into the affairs relating to buying ,selling and dealing in the shares of Mangalya Exports Ltd. (hereinafter referred to as “MEL”) for the period 17.05.2000 to 21.07.2000. Investigation revealed that MEL had been a continuously loss incurring company with a very small volume of turnover. The price of the scrip went up from Rs.96/- to Rs.194/- in a month’s time in May-June 2000 and then declined to the same level of Rs.96/- in June-July 2000. Based on the Investigation Report, SEBI vide order dated 19.03.2004 appointed an Enquiry Officer under the provisions of Regulation 5 of SEBI (procedure for holding enquiry by enquiry officer and imposing penalty) Regulations, 2002 (hereinafter referred to as the said “Regulations”) to inquire into the alleged violations of SEBI (Stock Brokers & Sub - Brokers) Regulations, 1992 (hereinafter referred to as “ Stock Broker Regulations”) committed by the sub broker.

8. The sub broker replied to the above said SCN vide letter dated October 3, 2005 and further submitted that it was acting as sub broker for more than 20 years and Mr. Ashish Suresh Shah, proprietor of M/s Rushil Enterprise has been dealing with it for more than 10 years. Their pay in of funds and securities were always in time and it was a small broker and pleaded for the withdrawal of charges.

scrip should have alerted the sub-broker and put him on caution while executing the trades. I am therefore, in agreement with Enquiry Officer that the sub broker violated Clause A (2) of the Code of Conduct as specified in Schedule II read with regulation 15 of Stock Broker Regulations and it is a fit case to impose a minor

Source: SecMarx — sebi:15307. 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.