sebi:8131

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 S. P. Rakhecha & Co (Shanti Prasad Rakhecha)

Holding

The Broker M/s S. P. Rakhecha & Co violated Regulation 4(b) of the PFUTP Regulations, 1995 and Regulation 7 read with clauses A(3) and (4) of the Code of Conduct under Schedule II of the Stock Brokers and Sub-Brokers Regulations, 1992 by executing 21 instances of synchronized/matching trades in Ranbaxy Laboratories Ltd shares to create misleading appearance of trading. A penalty of 'censure' was imposed instead of the four-month suspension recommended by the Enquiry Officer.

Full text

APPEARANCES FOR COMPANIES/ BROKERS: Shri. Debendra Kumar Jain FOR SEBI Mrs Barnali Mukherjee, DGM, SEBI ORDER Under Regulation 13(4) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 1.0 BACKGROUND 1.1 Securities and Exchange Board of India (hereinafter referred to in short as “the Board”) had ordered an investigation into the affairs relating to buying, selling and dealings of several entities including M/s S. P. Rakhecha & Co, (Shanti Prasad Rakhecha) in the shares of Ranbaxy Laboratories Ltd (hereinafter referred to in short as “Ranbaxy”) on observing sudden spurt in price of the scrip of Ranbaxy from Rs.270/- in January 1999 to about Rs.1200/- in October 1999 accompanied with significant increase in volumes particularly on the Stock Exchange, Mumbai (BSE), National Stock Exchange (NSE) and Calcutta Stock Exchange (CSE). M/s S. P. Rakhecha & Co. is a broker of Calcutta Stock Exchange 1. 1.

(CSE) (hereinafter referred to as “the Broker”) with SEBI Registration no. INB031032718. 1.2 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 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 read with clause A(3), A(4) and A(5) of Code of Conduct as specified in Schedule II of 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. 1.3 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 as ‘the Enquiry Regulations’), submitted a report dated October 31, 2003 whereby he observed that the broker violated the provisions of SEBI circular No.SMDRP/POLICY/CIR-32/1999 dated September 14, 1999; Regulation 7 read with clause A(3) and (4) of Code of Conduct as specified in Schedule II of SEBI (Stock Brokers & Sub-Brokers) Regulations, 1992 and Regulation 4(b) & (c) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities

to show cause as to why the action, as recommended by the Enquiry Officer, should not be imposed on him. The broker submitted its reply to the said show cause notice, vide letter dated December 10, 2003. 3.0 REPLY OF THE BROKER TO THE SHOW CAUSE NOTICE. 3.1 The Broker vide aforesaid reply dated December 10, 2003 stated that he will not do any such type of trade in future and requested to forgive him and pleaded for a minimum

Source: SecMarx — sebi:8131. 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.