sebi:8089

SEBI · SEBI · 2002-11-27 · V. K. CHOPRA, WHOLE TIME MEMBER

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Facts / Headnote

Penalty of 'censure' imposed on the Broker

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 13(4)
• Reg. 4(a)
• Reg. 6
• Reg. 4(b)

Parties

• M/s Lalit Co. (Kishan Lal Pugalia)

Holding

The Broker, M/s Lalit Co. (Kishan Lal Pugalia), violated Regulation 4(b) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 and Regulation 7 read with clause A(3) and (4) of the Code of Conduct under Schedule II of the SEBI (Stock Brokers & Sub-Brokers) Regulations, 1992 by executing 24 synchronized trades in Ranbaxy shares. A penalty of 'censure' was imposed on the Broker.

Full text

DATE OF HEARING: 13.09.2006 APPEARANCES: FOR COMPANIES/ BROKERS: Mr. Sanjeev Kothari, Authorised Representative of M/s Lalit Co. (Kishan Lal Pugalia) FOR SEBI: Mrs Barnali Mukherjee, DGM, SEBI

1.2 The price of the scrip of Ranbaxy had 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) and 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 Regulation 4(a), (b), (c) and (d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 (hereinafter referred to in short as “PFUTP Regulations”) Regulation 7 of the SEBI (Stock Brokers & Sub-Brokers) Regulations, 1992 read with clause A(3) and (4) of Schedule II of the Code of Conduct for Stock Brokers issued under SEBI (Stock Brokers & Sub-Brokers) Regulations, 1992 (hereinafter referred to in short as “Stock Brokers Regulations”) and Rules, Regulations and Bye-laws 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 submitted a report dated November 14, 2003 whereb

1995. He recommended suspension of registration of the Broker for a period of five months. 2.0 SHOW CAUSE NOTICE 2.1 Pursuant to the receipt of the said Enquiry Report, a Show Cause Notice dated December 05, 2003 was issued to the Broker, along with a copy of the said Enquiry Report, advising them 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 January 20, 2005. 3.0 REPLY OF THE BROKER TO THE SHOW CAUSE NOTICE 3.1 The Broker stated that they had no intention to manipulate the market equilibrium and make personal gain by duping investors and they added that they were doing daily jobbing in various scrips. 3.2 The Broker stated that Ranbaxy had been very active scrip in the market during 1999-2000 and as a jobber they had traded in Ranbaxy. There had been basically nil delivery position at the end of each day. Hence it was just not possible for them to manipulate price in the market with daily turnover of quantity like 5000 shares. 3.3 The Broker stated that the trades were executed on the trading terminal of CSE’s C- Star system, where it is impossible to know the counter party broker. They also stated they have not done any share broking activities in the market for the last three years. 4.0 HEARING 4.1 The Broker has not sought for a personal hearing. However, an opportunity of personal hearing was gr

Source: SecMarx — sebi:8089. 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.