sebi:MO/72/IVD/3/04

SEBI · SEBI · 2003-10-13 · A K BATRA, 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

Certificate of registration suspended for a period of six months

Provisions invoked

• s. 19

Regulations

• Reg. 4
• Reg. 7
• Reg. 199
• Reg. 13(2)
• Reg. 13
• Reg. 4(a)

Parties

• M/s Shree Harivansha Securities Pvt. Ltd.

Holding

The certificate of registration of M/s Shree Harivansha Securities Pvt. Ltd. was suspended for six months for indulging in off-market deals and for receiving/paying funds to fellow brokers without corresponding securities transactions.

Full text

2 member carried out business other than that of securities, which is prohibited under Rule 8(1)(f) of Securities Contracts (Regulation) Rules, 1957. 3.0 The Enquiry Officer submitted his report on 30.09.2003. In his report the EO found that the member indulged in off market deals and lending of funds and recommended suspension of certificate of registration of the member for a period of 6 months. 3.1 Consequent upon above, in terms of regulation 13(2) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as ‘the said regulations’) a show cause notice dated 13.10.2003 was issued to the member to show cause as to why the penalty as recommended by the enquiry officer should not be imposed on it. The member was advised to submit its reply, if any, within 15 days of the receipt of the show cause notice failing which it would be presumed that the member has no explanation to offer. The member was also asked to intimate along with the reply whether it desired a personal hearing. The member replied to the said show cause notice vide letter dated 22.11.2003. 3.2 The member vide the said reply submitted that : 3.2.1 With regard to transactions with outsider, besides principal to principal transactions, outside the price and order matching mechanism of CSE the member stated that it is a common practice among the members of the stock exchange to carry out off-the-floor transactions. The member submitted that it is a us

3 3.2.3 The member further submitted that whatever it had done was bonafide and was with an honest intention to minimize its losses incurred arising out of drastic fall on the price of securities and to survive and sustain itself and CSE failed to educate it on such deals. 3.2.4 The member denied that it indulged in malpractices as alleged or created any false market. It is also denied that ‘off the floor transactions’ entered into are of the nature of negotiated deals, hence the member contended that this should be considered in the right spirit and perspective. 3.2.5 With respect to receipts / payments of funds for members of CSE without corresponding transactions in securities, the member submitted that the inspecting officer failed to appreciate the financial accommodations extended to fellow brokers to overcome their financial constraints for temporary and short periods. 3.2.6 The member further submitted that it was a customary practice among the fellow members and business community to extend support in the hour of financial scarcity. It is reciprocal in nature. It is solely done with the object of supportive act and not at all with the intention to gain or earn out of it. The member stated that it did not use or utilize any part or portion of investors fund while granting financial accommodation to fellow member as set out in the enquiry report forming part of the show cause notice. The member submitted that whatever was done was done with their own funds with sole in

4 Name of the Broker : Sanjay Khemani Name of the Scrip Date of transaction Sett. No Buy/Sell Quantity Price (Rs) HFCL 08.03.01 49/01 Buy 40000 392.50 HFCL 02.03.01 49/01 Sell 40000 741.50 DSQ 08.03.01 49/01 Buy 150000 257.10 DSQ 02.03.01 49/01 Sell 150000 360.50 Zee 07.03.01 49/01 Buy 200000 106.90 Zee 02.03.01 49/01 Sell 200000 161.10 Silverline 07.03.01 49/01 Buy 200000 108.90 Silverline 02.03.01 49/01 Sell 200000 176.50 Satyam 05.03.01 49/01 Buy 150000 237.50 Satyam 02.03.01 49/01 Sell 150000 310.50 Global Tele 07.03.01 49/01 Buy 50000 245.50 Global Tele 02.03.01 49/01 Sell 50000 372.50 NET AMOUNT PAYABLE AS PER DIFFERENCE STATEMENT Rs. 71130000.00 Name of the Scrip Date of transaction Sett. No Buy/Sell Quantity Price (Rs) HFCL 14.03.01 50/01 Buy 60000 196.50 HFCL 09.03.01 50/01 Sell 60000 354.50 DSQ 15.03.01 50/01 Buy 150000 106.50 DSQ 09.03.01 50/01 Sell 150000 228.50 Zee 13.03.01 50/01 Buy 200000 96.90 Zee 09.03.01 50/01 Sell 200000 125.10 Silverline 14.03.01 50/01 Buy 200000 71.90 Silverline 09.03.01 50/01 Sell 200000 108.10 Satyam 13.03.01 50/01 Buy 150000 178.50 Satyam 09.03.01 50/01 Sell 150000 239.50 Global Tele 14.03.01 50/01 Buy 80000 148.40 Global Tele 09.03.01 50/01 Sell 80000 243.50 Net amount payable as per difference statement Rs. 57418000.00 Name of the Scrip Date of transaction Sett. No Buy/Sell Quantity Price (Rs) Delivery Recd./ made on Pay- Ment made/ recd.on Zee 10.01.01 41/01 Sell 50000 264.00 11.01.01 13.01.01 Zee 12.01.01 42/01 Buy 50000 245.00 12.

Source: SecMarx — sebi:MO/72/IVD/3/04. 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.