sebi:WTM/GA/09/ERO/5/07

SEBI · SEBI · 2005-09-29 · G. ANANTHARAMAN, 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

Major penalty imposed: suspension of certificate of registration of Shivam Stock Broking Pvt. Ltd. (Registration No. 031051239) for a period of two years, with the period of prohibition already undergone since SEBI's interim order dated September 29, 2005 set off against the said period; order effective immediately.

Regulations

• Reg. 4
• Reg. 13(4)
• Reg. 5(1)
• Reg. 13(2)
• Reg. 3
• Reg. 6
• Reg. 4(2)
• Reg. 2
• Reg. 47
• Reg. 4(2)(a)
• Reg. 4(2)(e)

Parties

• Shivam Stock Broking Pvt. Ltd.

Holding

The Whole Time Member held that Shivam Stock Broking Pvt. Ltd. violated Regulation 4(2)(a) and (e) of the FUTP Regulations and Clauses A(1), (2), (3) of the Code of Conduct under the Broker Regulations by executing cross deals and synchronized trades in the shares of Prime Capital Markets Ltd. that created false/misleading appearance of trading and manipulated price and volume. A major penalty of two years' suspension of its certificate of registration was imposed, with the prior period of prohibition set off.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER AGAINST SHIVAM STOCK BROKING PRIVATE LIMITED, MEMBER, CALCUTTA STOCK EXCHANGE ASSOCIATION LIMITED UNDER REGULATION 13(4) OF SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002 IN RESPECT OF ITS TRANSACTIONS IN THE SHARES OF PRIME CAPITAL MARKET LIMITED 1.0 BACKGROUND 1.1 It was observed that the price of the shares of M/s Prime Capital Markets Ltd. (hereinafter referred to as PCML) which were listed at the Calcutta Stock Exchange Association (hereinafter referred to as CSE) had increased from Rs. 14.00/- on March 17, 2005 to Rs. 280.40/- on September 15, 2005 i.e an increase of 1903% within a period of 5 mon 28 days. It has been alleged that the financials of PCML were not strong enough for the aforesaid price increase and therefore it, appeared that the said price rise had occ account of manipulation by certain entities/ stock brokers. 1.2             A preliminary analysis of the trading data for the said period at CSE revealed that certain stock brokers namely Shri. Sanju Kabra, Shivam Stock Broking Pvt. Ltd, and M/ Co. (members of CSE) contributed substantially in the total volume of the shares of PCML during the above period. It was further revealed that the said stock brokers e cross deals / synchronized trades among themselves and the same constituted a major portion (about 93%) of trading in the said share

REGULATIONS, 2002 IN RESPECT OF ITS TRANSACTIONS IN THE SHARES OF PRIME CAPITAL MARKET LIMITED 1.0 BACKGROUND 1.1 It was observed that the price of the shares of M/s Prime Capital Markets Ltd. (hereinafter referred to as PCML) which were listed at the Calcutta Stock Exchange Association Limited (hereinafter referred to as CSE) had increased from Rs. 14.00/- on March 17, 2005 to Rs. 280.40/- on September 15, 2005 i.e an increase of 1903% within a period of 5 months and 28 days. It has been alleged that the financials of PCML were not strong enough for the aforesaid price increase and therefore it, appeared that the said price rise had occurred on account of manipulation by certain entities/ stock brokers. 1.2 A preliminary analysis of the trading data for the said period at CSE revealed that certain stock brokers namely Shri. Sanju Kabra, Shivam Stock Broking Pvt. Ltd, and M/s. D.B & Co. (members of CSE) contributed substantially in the total volume of the shares of PCML during the above period. It was further revealed that the said stock brokers executed cross deals / synchronized trades among themselves and the same constituted a major portion (about 93%) of trading in the said shares. It was observed that the price movement and the share transactions in the said shares were prima facie artificial and designed to create a false market and artificial price. 1.3 The turnover contribution of the aforesaid three brokers in the shares of PCML is given below:

No Member Name Trading Data Buy % to Total Buy Sell % to Total Sell Total % to Total Buy & Sell 1 D B & Co 759252 41.68 759150 41.67 1518402 41.67 2 Shri Sanju Kabra 161601 8.87 920550 50.53 1082151 29.70 3 Broker 752950 41.33 15901 0.87 768851 21.10 Total 1673803 91.88% 1695601 93.07 3369404 92.47 1.4 In the facts and circumstances, Securities and Exchange Board of India (hereinafter referred to as SEBI) vide an ad

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