sebi:CO/32/ERO/09/2004

SEBI · SEBI · 2003-07-17 · G. N. Bajpai, Chairman

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 of the Broker suspended for a period of 15 days, effective after expiry of 21 days from the date of the order.

Provisions invoked

• s. 4(3)

Regulations

• Reg. 4
• Reg. 13(4)
• Reg. 13(2)
• Reg. 13
• Reg. 13(1)
• Reg. 5(1)

Parties

• Spartek Financiers and Investment Pvt. Ltd.

Holding

The Broker's certificate of registration was suspended for 15 days for entering into cross deals in the scrip of Offshore Finvest Ltd. (OFL) where buy and sell orders were matched in quantity, price and time, in violation of Regulation 4 of SEBI (FUTP) Regulations, 1995. Alleged violations of SEBI Circulars regarding maintenance of client database and client registration forms were not established.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER REGULATION 13(1) SEBI (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002, IN THE MATTER OF SPARTEK FINANCIERS AND INVESTMENT PVT. LTD. 1.0 BACKGROUND 1.1 Spartek Financiers and Investment Pvt. Ltd. ( hereinafter referred to as the Broker) is a member of the Calcutta Stock Exchange ( hereinafter referred to as CSE ) and is registered with the Securities and Exchange Board of India (hereinafter referred to as SEBI ) vide registration no. INB031136139. 1.2 An investigation was conducted in the matter of buying, selling and dealing in the scrip of Offshore Finvest Ltd. (OFL). Investigation, inter alia, revealed that the Broker has played a role in the alleged price manipulation in the scrip of OFL and pursuant to the findings of the investigation, in terms of Regulation 5(1) of SEBI(Procedurefor Holding enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as "the said Regulations") read with Regulation 13 of SEBI( Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 [ hereinafter referred to as SEBI ( FUTP) Regulations ]an Enquiry Officer was appointed vide order dated 17.07.03 to enquire into the alleged contravention, if any, by the Broker. 2.0 ENQUIRY REPORT AND RECOMMENDATION : 2.1 The enquiry officer, after conducting the enquiry as per the procedure laid do

1.2 An investigation was conducted in the matter of buying, selling and dealing in the scrip of Offshore Finvest Ltd. (OFL). Investigation, inter alia, revealed that the Broker has played a role in the alleged price manipulation in the scrip of OFL and pursuant to the findings of the investigation, in terms of Regulation 5(1) of SEBI(Procedurefor Holding enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as "the said Regulations") read with Regulation 13 of SEBI( Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 [ hereinafter referred to as SEBI ( FUTP) Regulations ]an Enquiry Officer was appointed vide order dated 17.07.03 to enquire into the alleged contravention, if any, by the Broker. 2.0 ENQUIRY REPORT AND RECOMMENDATION : 2.1 The enquiry officer, after conducting the enquiry as per the procedure laid down in the said Regulations submitted a report dated 21.07.2004. 2.2 The Enquiry Officer found that the Broker has entered into cross deals and the buy and sell orders were matched in terms of

for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 as to why the action as considered appropriate should not be taken against him. 4.0 REPLY TO THE SHOW CAUSE NOTICE : 4.1 The broker submitted a reply vide letter dated 16.08.2004 stating that : a. they have executed the trades ordered by their registered clients at the prevailing market price and it has in no way resulted in price rigging or price manipulation. b. the difference between the higher and the lower price traded by the Broker between 28.08.2001 to 30.10.01 was just about Rs. 1.90, which means they were not indulged in any act which resulted in reflection of prices of securities as not genuine. c. the fact that buyer and seller belonged to the same group was a coincidence and due to time constraint it’s difficult to know the intention of the clients each time on receiving orders to be executed on the exchange and further there was nothing abnormal so as to arouse suspicion about the genuineness of the transaction. d. the trades were executed in the normal course of business and even a minor penalty would tarnish their business profile and hence pleaded a lenient view in the matter. 5.0 CONSIDERATION OF ISSUES AND FINDINGS : 5.1 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 other material on record. 5.2 I find that between July 2001 and October 2001 there was unusual movement in the prices and volumes tra

Source: SecMarx — sebi:CO/32/ERO/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.