sebi:WTM/37/12/2005/ID

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

Warning issued with direction to be more diligent

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 13

Parties

• M/s. Triveni Management Consultancy Services Ltd

Holding

M/s. Triveni Management Consultancy Services Ltd violated Clause A (2) of the Code of Conduct for brokers and was warned and directed to be more diligent in complying with the SEBI Act, Rules and Regulations.

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 M/s. Triveni Management Consultancy Services Ltd, Member, INB 230652831, National Stock Exchange, Mumbai, in the matter of trading of scrip of M/s. Morepen Hotels Ltd 1.0 Background 1.1 In December 1995, Morepen Hotels Limited (hereinafter referred to as MHL”) came out with a public issue at a premium of Rs.20/- per shar scrip was listed at Jaipur Stock Exchange, Ludhiana Stock Exchange, Delhi Stock Exchange, National Stock Exchange (hereinafter referred “NSE”) and The Stock Exchange, Mumbai (hereinafter referred to as “BSE”). There was a major spurt in the total volume in the scrip of MHL 29, 400 shares during January 2000 including nil volume for the entire month of July 2000, it shot up to 11, 34, 200 shares during the August to November 2000. Further, the percentage of net quantity delivered to gross quantity traded during the period 11 September 2000 November 2000 was less than 1% of the total traded volume on the exchange. The same trend was accompanied by the price, the price of of MHL touched a 52-week high at Rs.285/- on 11 September 2000 and this was followed by a fall in price, a 52-week low, touching Rs.154 15 November 2000. 1.2 In view of the above, Securities and Exchange Board of India (hereinafter referred to as

1.0 Background 1.1 In December 1995, Morepen Hotels Limited (hereinafter referred to as MHL”) came out with a public issue at a premium of Rs.20/- per share. The scrip was listed at Jaipur Stock Exchange, Ludhiana Stock Exchange, Delhi Stock Exchange, National Stock Exchange (hereinafter referred to as “NSE”) and The Stock Exchange, Mumbai (hereinafter referred to as “BSE”). There was a major spurt in the total volume in the scrip of MHL. From 29, 400 shares during January 2000 including nil volume for the entire month of July 2000, it shot up to 11, 34, 200 shares during the period August to November 2000. Further, the percentage of net quantity delivered to gross quantity traded during the period 11th September 2000 to 17th November 2000 was less than 1% of the total traded volume on the exchange. The same trend was accompanied by the price, the price of shares of MHL touched a 52-week high at Rs.285/- on 11th September 2000 and this was followed by a fall in price, a 52-week low, touching Rs.154.65 on 15th November 2000. 1.2 In view of the above, Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted an investigation into the trading of the scrip of MHL for the period June 2000 to December 2000 (hereinafter referred to as “investigation period”). During the investigation it was observed that the scrip of MHL was traded only at NSE and BSE. 1.3 It was observed that the P/E ratio of Morepen Hotels Ltd. was not in synchronisation with the rest of

1.4 The combined quantity traded in the scrip at BSE and NSE during the period June 2000 to December 2000 was approximately 38 lac shares out of which approximately 90% of the shares were traded by few entities at both the exchanges taken together. 1.5 It was observed during the investigation that during the investigation period M/s. Triveni Management Consultancy Services Ltd (hereinafter referred to as “TMCS”), Member of NSE, mainly engaged in the business of retail broking had traded in the scrip of MHL on behalf of a client, M/s. Vaibhav Laxmi Consultancy (hereinafter referred to as “VLC”). 1.6 VLC started trading with TMCS sometime in August 2000. TMCS had taken a deposit of Rs.7.50 lac from VLC before starting to trade on behalf of VLC and allotted a trading terminal on September 2000. It was observed that trading pattern of VLC was to square off its positions at the end of each settlement. Based on the deposit received from VLC, TMCS was monitoring only the net outstanding position of VLC at the end of the day. 1.7 It was found during the investigation that the transactions executed by VLC were actually for M/s. S. M. Investment. By trading for a third party, VLC was acting as sub-broker to TMCS and was trading on behalf of (Proprietor Shamshad Sheikh, who is an employee with Jem Fiscal Ltd.) TMCS had dealt with VLC as sub- broker without registering VLC as its sub-broker. 1.8 It has been alleged that TMCS not showing due skill, care and diligence in its dealings with

Source: SecMarx — sebi:WTM/37/12/2005/ID. 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.