sebi:15326

SEBI · SEBI · 1999-03-17 · Madhukar, Whole Time Member

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Facts / Headnote

No further action - member held not guilty, proceedings dropped

Provisions invoked

• s. 19
• s. 13

Regulations

• Reg. 7
• Reg. 13
• Reg. 5

Parties

• M/s. Blue Chip Stock Broking Private Limited / M/s. Blue Chip Stock Brokers Private Limited, Member, National Stock Exchange (SEBI Registration No. INB 230776338)

Holding

The Whole Time Member held M/s. Blue Chip Stock Broking Private Limited not guilty of violating Clause V of Para B of the Code of Conduct read with Regulation 7 and Rule 4(b), and directed that no further action be taken against it for its dealings in the scrip of Gujarat Mineral Development Corporation through its client Shri Ishwar Dayal Kansal.

Full text

Whereas, an investigation was conducted into the dealings in the scrip of M/s. Gujarat Mineral Development Corporation (hereinafter referred to as GMDC) after a sudden price rise was observed in the scrip in The National Stock Exchange (hereinafter referred to as NSE) between 28th March 2001 and 22nd May 2001, and, Whereas, during the investigation it was noticed that the average day wise and settlement wise volumes were 45,747 and 423,163 shares respectively. The gross and net traded volumes were 33,85,304 and 10,51,851 shares respectively. M/s. Blue Chip Stock Broking Private Limited (hereinafter referred to as ‘the member’) had contributed 24.82% of the gross quantity traded. Of these, 21.39% and 66% of the gross and net purchase quantity was contributed by a client, Shri Ishwar Dayal Kansal, who was a director of M/s. NRI Financial Services Ltd., Member, NSE. M/s. NRI Financial Services Ltd. was declared defaulter by NSE vide its Circular No. 128 dated 17.03.99, and, Whereas, an enquiry officer was appointed by SEBI vide order dated 04.08.03 under Regulation 5 (1) of SEBI (Proceedure for holding enquiry by an Enquiry Officer and recommendation of penalty) Regulations, 2002 for inquiring into the possible violation of the SEBI Act, 1992 and SEBI (Stock Broker and Sub-broker) Regulations, 1992, and, Whereas, the enquiry officer after conducting an inquiry into the transactions carried out by the member in the scrip of GMDC had found the member guilty of violating Clause V o

received within 15 days or else it would be presumed that the member had no explanation to offer and SEBI would be free to take such action in the matter as it deems fit, and, Whereas, a reply dated 06.08.04 was received from the member stated that it was not aware of Shri Kansal being a director of M/s. NRI Financial Services Ltd., since neither the directory of NSE members nor the circular of NSE declaring M/s. NRI Financial Services Ltd. as a defaulter specify Shri Kansal as a director therein, and, Whereas, the issue for consideration is whether, the member is guilty of violating the provisions of Clause V of Para B of the Code of Conduct for members prescribed in Schedule II read with Regulation 7 of SEBI (Stock Broker and Member) Regulations, 1992 and Rule 4(b) of SEBI (Stock Broker and Sub-broker) Rules, 1992. I have considered the enquiry report and the findings therein. I have also considered the reply of the member to the findings in the enquiry report. Now, I proceed to consider whether the member is guilty of violating the provisions as per the enquiry report. The member has contributed substantial volumes in the scrip of GMDC vide its transactions, of which Shri Kansal had accounted for a significant portion. The member has submitted that it had no means to verify whether Shri Kansal was a director of M/s. NRI Financial Services Ltd. from the information available in the public domain such as the directory of members of NSE or the circular of NSE declaring the me

considered the same to determine the charge against the member. In view of the above, I am inclined to agree with the submission of the member that they had no means to verify the fact that Shri Kansal was a director of M/s. NRI Financial Services Ltd., a defaulting member of NSE. Therefore, I hereby conclude that the member is not guilty of violating the provisions of Clause V of Para B of the Code of Conduct for members prescribed in Schedule II read with Regulation 7 of SEBI (Stock Broker and Sub-broker) Regulations, 1992 and Rule 4(b) of SEBI (Stock Broker and Sub-broker) Rules, 1992. Consequently, in exercise of powers conferred upon me, by virtue of Section 19 of the SEBI Act, 1992 read with Regulation 13 (4) of SEBI (Proceedure for holding enquiry by an Enquiry Officer and recommendation of penalty) Regulations, 2002, I hereby direct that no further action be taken against M/s. Blue Chip Stock Brokers Private Limited, Member, The National Stock Exchange, (SEBI Registration No. INB 230776338) for his dealings in the scrip of M/s. Gujarat Mineral Development Corporation through his client, Shri Ishwar Dayal Kansal. PLACE: MUMBAI MADHUKAR DATE:25-01-06 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

Source: SecMarx — sebi:15326. 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.