sebi:BM/AO-154/2013
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Facts / Headnote
Penalty imposed on the Noticee for violations of PFUTP Regulations, Stock Broker Code of Conduct, SEBI AML Circulars, and SEBI Act provisions on furnishing information.
Provisions invoked
- s. 11
- s. 15A
- s. 15
- s. 12
- s. 15H
- s. 15J
Regulations
- Reg. 7
- Reg. 3
- Reg. 4(1)
- Reg. 4(2)
- Reg. 200
- Reg. 3(a)
- Reg. 3(c)
- Reg. 3(b)
- Reg. 4(2)(a)
- Reg. 4(2)(b)
- Reg. 3(d)
Parties
- Ford Brothers Capital Service Ltd
Holding
The Adjudicating Officer held that the Noticee violated regulations 3(a),(b),(d) and 4(1), 4(2)(a),(b),(e) of the PFUTP Regulations, Regulation 7 read with the Code of Conduct under Schedule II of the Stock Broker Regulations, sections 11C(2),(3),(5) of the SEBI Act, and the SEBI AML Circulars, and imposed a total penalty of Rs. 30,00,000/-.
Full text
Page 2 of 23 price of the scrip and heavy volumes were traded in the scrip during the investigation period. 2. It was observed that, the price of the scrip opened at 48/- on June 13, 2005 and moved to a high of 127.75 (166.15% rise) on June 30, 2005 with an average traded volume of 615234 shares at BSE. It was observed that the price of the scrip was rising between September 20, 2006 to October 16, 2006 ( 14.50 to 18.25) and the price of the scrip started falling from October 17, 2006 to reach a low of 10.60 by November 23, 2006 at BSE. During this period no trading was observed in the scrip of NEL on ASE.
Page 3 of 23 buy orders for 27.34 crore shares, buy orders for 9.62 crore shares representing 35.19% of total buy orders quantity were placed by the Noticee on behalf of client Mr. Shailesh M Ved (hereinafter referred to as Mr. Shailesh). Investigation revealed that the Noticee on behalf of Mr. Shailesh was placing big buy orders and also was placing the buy orders at lesser price to the last traded price and was deleting such orders after some time. Further they were placing buy orders at lesser price when there were no seller in the market thereby netted off the transactions on most of the days and were also placing big buy orders and was later updating them with minor change or without any changes thus creating buying pressure in the scrip. Investigation also observed that the Noticee on behalf of Mr. Shailesh traded in huge volume in the scrip and the value of the order placed by him was disproportionate to the income of their client Mr. Shailesh as shown in the K Y C form and the client of the Noticee was not having any securities as per statement of account provided by the Noticee. Further Noticee gave Mr. Shailesh debit limit up to 2.84 crore. Investigation further revealed that the Noticee had not appointed a Principal Officer who was suppose to inform the details of cash/suspicious transaction report of Mr. Shailesh to the Financial intelligence Unit India, New Delhi, as per SEBI circular dated 20.03.2006 and 18.01.2006 as Mr. Shailesh was having annual income belo
Page 4 of 23 in respect of the alleged charges, the Noticee would be liable for monetary penalty under sections 15HA and 15 HB of SEBI Act.
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Source: SecMarx — sebi:BM/AO-154/2013. 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.