sebi:WTM/46/IVD/12/05

SEBI · SEBI · Madhukar, Whole Time Member

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Facts / Headnote

Minor penalty of suspension of certificate of registration of M/s. Varun Stock Broking as sub-broker for a period of two months imposed

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 13
• Reg. 5
• Reg. 15

Parties

• M/s. Varun Stock Broking

Holding

SEBI found M/s. Varun Stock Broking guilty of violating Clause A(2) of the Code of Conduct and imposed a minor penalty of suspension of its certificate of registration as sub-broker for two months.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ Order against M/s. Varun Stock Broking Dec 27, 2005 | Orders : Orders of Chairman/Members WTM/46/IVD/12/05 SECURITIES AND EXCHANGE BOARD OF INDIA

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, the volume of scrip of MHL 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 was followed by a fall in price of Rs.154.65 on 15th November 2000 touching a 52- week low. 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 MHL was not in synchronisation with the rest

1.4 The gross quantity traded i.e. buy and sell in the scrip at BSE and NSE during the period June 2000 to December 2000 was 77,01,773 shares. During the course of investigation, it was observed that most of the clients trading in the scrip were linked to each other. 1.5 The total quantity traded by these entities as per the information gathered during investigation is given as under: Sr.No Name of the Entity Purchases Sales Gross 1. M/s. Jem Fiscal Ltd. 10, 37, 800 10, 32, 001 20, 69, 801 2. M/s. F. T. Traders 8, 54, 800 8, 52, 200 17, 07, 000 3. M/s. K. N. Traders 6, 26, 226 6, 26, 226 12, 52, 452 4. M/s. Prashant Investment 66, 300 66, 300 1, 32, 600 5. M/s. K. P Investment 5, 94, 900 5, 95, 300 11, 90, 200 6. M/s. S. M. Investment 3, 04, 000 3, 04, 000 6, 08, 000 7. M/s. N. N. Investment 3, 65, 500 3, 65, 500 7, 31, 000 8. M/s. Hakeem Auto Ltd. 6, 610 4, 100 10, 710 Total 38, 56, 136 38, 45, 627 77, 01, 763 1.6 During investigation as per the statement of Shri Vishal Mashewari, authorized signatory of M/s. Varun Stock Broking (hereinafter referred to as “Sub-broker”), a SEBI registered sub-broker to M/s. Suresh Rathi Securities Pvt. Ltd., had traded in the scrip of MHL on behalf of its client M/s. Jem Fiscal Ltd (hereinafter referred to

Source: SecMarx — sebi:WTM/46/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.