sebi:8064

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

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Penalty of censure imposed on the Broker

Provisions invoked

• s. 19

Regulations relied on

• SEBI (PFUTP) Regulations, 1995 — 4(b)
• SEBI (Stock Brokers) Regulations, 1992 — 7

Parties

• Mr Shyam Sundar Dalmia

Holding

The Broker Shyam Sundar Dalmia was found to have violated Regulation 7 read with clause A(3) and (4) of the Code of Conduct in Schedule II of the Stock Brokers Regulations and Regulation 4(b) of the PFUTP Regulations by executing 7 predetermined synchronized trades with CSE brokers sharing the same address, and a penalty of censure was imposed instead of the recommended five-month suspension.

Full text

DATE OF HEARING: 28.09.2006 APPEARANCES FOR COMPANIES/ BROKERS: Shri. Somasekhar Sundaresan, Advocate, J. Sagar & Associates Shri. Rajesh Sinha, Company Secretary, M/s Dalmia Securities (p) Ltd FOR SEBI 1. Mrs. Barnali Mukherjee, DGM, SEBI

1.2 The price of the scrip of Ranbaxy 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), Calcutta Stock Exchange (CSE). 1.3 The Board after considering the Investigation Report 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 imposing penalty) Regulations, 2002 (hereinafter referred to in short as “Enquiry Regulations”) submitted a report dated December 23, 2003 under Regulation 13(1)

2.0 SHOW CAUSE NOTICE 2.1 Pursuant to the receipt of the said Enquiry Report, a Show Cause Notice dated April 28, 2004 was issued to the Broker, along with a copy of the said Enquiry Report, advising him to show cause as to why the action, as recommended by the Enquiry Officer or any other penalty deemed appropriate should not be imposed on them. The Broker submitted its reply to the said show cause notice, vide letter dated May 19, 2004. 3.0 REPLY OF THE BROKER 3.1 The Broker stated that the recommendation made by the Enquiry Officer is not commensurate with the purported findings and hence the same is unsustainable. 3.2 The Broker stated that they did not execute any synchronized trades in the scrip of Ranbaxy. They further stated that the charge of artificial matching of trade by executing 41 transactions can not be levelled merely because a purchase

Source: SecMarx — sebi:8064. 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.