sebi:MO/52/IVD/12/05

SEBI · SEBI · Madhukar, Whole Time Member

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

Facts / Headnote

Minor penalty of suspension of certificate of registration for a period of one month imposed

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 4
• Reg. 13
• Reg. 2

Parties

• Shri Bhupendra Meghji Bheda

Holding

Shri Bhupendra Meghji Bheda was found guilty of violating Clause A(2) of the Code of Conduct and Regulation 4(b) and (d) of FUTP Regulations, and a minor penalty of suspension of certificate of registration for one month was imposed.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER Under regulation 13 (4) of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 against Shri. Bhupendra Meghji Bheda, Member, INB 010002515, The Stock Exchange, Mumbai, in the matter of M/s. Eonour Software Limited. 1.0 Background 1.1 In January 1996, M/s. Eonour Software Limited (hereinafter referred to as “ESL”) had come out with a public issue of 12, 50, 000 shares of R each at a premium of Rs.20/- per share aggregating to Rs.375 lacs. Shares of ESL were listed at The Stock Exchange, Mumbai (here referred to as “BSE”), Madras Stock Exchange, Madhya Pradesh Stock Exchange, and Ahmedabad Stock Exchange. 1.2 The scrip of ESL was listed at BSE on 13 March 2000 and the first trade was reported on 12 June 2000 at a price of Rs. 520/- which went up 634.75 by 7 July 2000. A total of 2, 22, 600 shares were traded during the period 1 December 1999 and 31 July 2000 at BSE. The ma quantity traded on BSE on a particular day during the said period was on 22 June 2000, number of shares traded being 11, 700 shares. 1.3 Securities and Exchange Board of India (hereinafter referred to as “SEBI”) had conducted an investigation into the trading of the scrip of ESL. 1.4 Investigations revealed that brokers mentioned in following Table-1 were the top ten brokers in terms of gross quantity traded during the period 2000 to December 2000

1.0 Background 1.1 In January 1996, M/s. Eonour Software Limited (hereinafter referred to as “ESL”) had come out with a public issue of 12, 50, 000 shares of Rs.10/- each at a premium of Rs.20/- per share aggregating to Rs.375 lacs. Shares of ESL were listed at The Stock Exchange, Mumbai (hereinafter referred to as “BSE”), Madras Stock Exchange, Madhya Pradesh Stock Exchange, and Ahmedabad Stock Exchange. 1.2 The scrip of ESL was listed at BSE on 13th March 2000 and the first trade was reported on 12th June 2000 at a price of Rs. 520/- which went up to Rs. 634.75 by 7th July 2000. A total of 2, 22, 600 shares were traded during the period 1st December 1999 and 31st July 2000 at BSE. The maximum quantity traded on BSE on a particular day during the said period was on 22nd June 2000, number of shares traded being 11, 700 shares. 1.3 Securities and Exchange Board of India (hereinafter referred to as “SEBI”) had conducted an investigation into the trading of the scrip of ESL. 1.4 Investigations revealed that brokers mentioned in following Table-1 were the top ten brokers in terms of gross quantity traded during the period June 2000 to December 2000 at BSE. These brokers were selected on the basis of their Gross Purchases, Gross sales and Gross position. Table -1 Name of Broker Purchases % of Total Sales % of Total Gross

from the hands-off attitude of the Broker. Broker had contended that he is free to install a BOLT terminal wherever he deems fit. The termina stock exchange can be installed by the Broker after complying with rules, regulations and bye laws of the concerned stock exchange a terminal has to be under the control of the Broker. The terminal cannot be used by the client at his sweet will as has been the position present case i.e.  the terminal was given to the client and was under the control of the client.  Besides, Broker is responsible for all the t done through such terminal. 4.3 Broker’s act of not being diligent enough allowed FT Traders in indulging acts calculated to create a false and misleading appearance of trading scrip of ESL, which resulted in building up of artificial volumes and price in the scrip of ESL. This is detrimental to the interest of investors a orderly development of the securities market. The broker contended that the trading of Rs.59 crore done by the Client was insignificant com to his own turn over and that the Client was not even among his top ten clients hence, he did not find anything alarming in the trading of the Being a registered intermediary, Broker is under positive obligation to be more diligent while dealing with his clients, which he failed in the case resulting in violation of Clause A (2) of the Code of Conduct specified for brokers, in Schedule II in terms of Regulation 7 of Regulations. 4.4 From the material before me I observed that

Source: SecMarx — sebi:MO/52/IVD/12/05. 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.