sebi:CO/18/MIRSD/09/2004

SEBI · SEBI · 2004-01-08 · G. N. Bajpai, Chairman, SEBI

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Certificate of registration suspended for a period of 3 months, effective after expiry of 21 days from the date of the order

Provisions invoked

• s. 4(3)

Regulations

• Reg. 7
• Reg. 13(4)
• Reg. 13(2)
• Reg. 17

Parties

• Shashikant M. Damani

Holding

The Broker, Shashikant M. Damani, was held guilty of specified violations of stock broker regulations, BSE bye-laws and SEBI circulars, and his certificate of registration was suspended for a period of 3 months with effect after expiry of 21 days from the date of the order.

Full text

2 2.1 The enquiry officer, after conducting the enquiry as per the procedure laid down in the said Regulations submitted a report dated 08.01.2004. 2.2 The Enquiry Officer found that the Broker has violated Rule 4 (b) of SEBI (Stock Brokers and Sub Brokers) Rules, 1992 , Clause (k) and (m) of Sub regulation (1) of Regulation 17 of the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 , Clause A(5) of the Code of Conduct as specified in Schedule II read with Regulation 7 of the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 , Bye laws, Rules and Regulations of Bombay Stock Exchange and the various directives/circulars issued by SEBI from time to time. In the light of the above, the Enquiry Officer Recommended that the registration of the Broker be suspended for a period of Six ( 6 ) months . 3.0 SHOW-CAUSE NOTICE: 3.1 A Show Cause Notice dated 23rd January 2004 bearing the reference no. MIRSD/DPS-1/Enq/RG/1582/2004 was issued to the Broker along with a copy of the enquiry report, calling upon to show cause, in terms of Regulation 13(2) of the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 as to why action as considered appropriate should not be taken against him. The Broker was given a period of 15 days to submit his reply and was asked to indicate whether he desires a personal hearing. There after two reminder letters dated 19/02/2004 and 10/03/2004 respectively were sent to the Bro

3 already given had elapsed, SEBI did not consent to the request and expressed the desire to proceed ex patre. 4.2 As per a letter bearing no date which was received by SEBI on 10.03.2004, the Broker , again being represented through his Chartered Accountant, expressed his desire to be personally heard in the matter. The Broker also requested for personal hearing, vide his letter dated 22.03.2004. Vide letter dated 07.04.2004 , the Broker gave para wise reply to the charges leveled against him by the Enquiry Officer and again expressed his desire for personal hearing. The Broker refuted all the finding and allegations of the Enquiry Officer and stated that he is not guilty of any of the charges as specifically mentioned in the Show Cause Notice . 5.0 HEARING : 5.1 In compliance with the principle of natural justice an opportunity of personal hearing was given to the Broker at 4.00 p m on 26.05.04 wherein the Broker himself appeared along with Mr. Mohanlal Jain, a Chartered Accountant , and made his submissions reiterating his earlier stand. 6.0 CONSIDERATION OF ISSUES AND FINDINGS : 6.1 I have considered the facts of the case, the findings of the Enquiry Officer, the reply of the Broker to the show cause notice and submissions made by him in the personal hearing held on 26.05.04. 6.2 As to the allegation that the Broker has failed to report Principal to Principal trades pertaining to settlement No. 17 of 1998-99, I note the following instances as per the inspection report :

4 The Broker did not dispute the fact that some of these trades did not result in delivery and were squared off during the settlement. The Broker vide his latter dated nil received by SEBI on 16.05.2000 stated that he has failed to show the Sauda register copy reflecting the said transactions to the auditors. It was alleged that the Broker has shown the copies to the auditors later, however no such copy was brought on record. The Broker further contended that Form No. B and the approval required in writing from the client for principal to principal transactions was duly obtained. It was stated that it was difficult to get the consent immediately since most of the clients were upcountry clients. Therefore, there was a delay in Contract No. Client Scrip Quantity Rate B/s F/17/13/12 Rajiv Gupta Reliance Ind. 1100 153 S F/17/16/16 Rajiv Gupta & Co. Reliance Ind. 1100 150 B F/17/17/18 Singhania Bros. Pvt. Ltd. Ballarpur Ind. 5000 25 B Balrampur 1250 131 B Bata India 1000 183 B BOC India 800 44 B CESC Ltd. 1100 30 B Hind.Develp 7000 11 B Hind. Lever 100 1652.3 S Hind Lever 500 1652.5 S Hind. Motor 14300 10 B Indian Petro 700 56 B Ispat Ind. 1850 7 S ITC Bhadrachal am 2300 255 B Jai Prakash Ind. 5200 10.5 B Kesoram Ind. 1800 21 S Master Shares 2100 13 S Phillips India 300 127 B Shaw Wallace 500 34 B SAIL 16200 8.5 B Tinplate 1000 5 B

Source: SecMarx — sebi:CO/18/MIRSD/09/2004. 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.