sebi:WTM/GA/1/ERO/4/07

SEBI · SEBI · 2001-07-02 · G. Anantharaman, Whole Time Member

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Facts / Headnote

Major penalty imposed: suspension of certificate of registration of PDC Securities Pvt. Ltd. (Registration No. INB030978739) for six months, overriding the Enquiry Officer's recommendation of no action.

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 4
• Reg. 13(4)
• Reg. 5(1)
• Reg. 13
• Reg. 4(a)

Parties

• PDC Securities Pvt. Ltd.

Holding

PDC Securities Pvt. Ltd. violated Regulation 4(a) and (b) of the FUTP Regulations and clauses A(1), A(2) and A(4) of the Code of Conduct under the Broker Regulations by executing cross deals that created a false appearance of trading and artificially raised the price and volume of Globe Stocks & Securities Ltd. shares; a major penalty of six months' suspension of its registration certificate was imposed.

Full text

Page 2 of 23 1.1 It was noticed that the price of the shares of Globe Stocks & Securities Ltd. (hereinafter referred to as the company) increased from Rs. 3.70 during July 2-6, 2001 to Rs. 28.80 during October 8-12, 2001 at Calcutta Stock Exchange Association Limited (hereinafter referred to as CSE), the stock exchange where the shares of the company were listed. 1.2 In view of the aforesaid unusual price movement noticed in the shares of the company, Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted an investigation in respect of buying, selling and dealing in the shares of the company and to inquire into whether the said company, other intermediaries/persons associated with the said buying, selling and dealing in the shares of the company contravened the provisions of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (hereinafter referred to as the FUTP Regulations), Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations), Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations,1997, (hereinafter referred to as the ‘Takeover Regulations’) and Securities and Exchange Board of India (Prohibition of Insider Trading ) Regulations, 1992 (hereinafter referred to as the insider Trading Regulations). 1.3 The investigation conducted

Page 3 of 23 1.4 It was found that the Broker had executed trades for 8,94,300 (both buy and sale) shares of the company on behalf of its various clients out of the total turnover 64,86,302 shares at CSE. The trades of the Broker accounted for 14% of the total volumes in the shares of the company at CSE. Investigation revealed that out of the aforesaid trades of the Broker, 8,93,000 shares were executed by way of cross deals wherein both the buy and sell orders were entered by the Broker in its single terminal almost at the same time with the same price and quantity with most of the trades being client to client transactions.

Page 4 of 23 1.6 The cross deals executed by the Broker in the shares of company are given below: Trade No. Trade Date TradeTime OrderNo. OrderDate OrderTime Qty. Price (Rs.) B /S 1055 02-Jul-01 12:42:22 PM 630789389 02-Jul-01 12:40:46 PM 500 3.70 B 1055 02-Jul-01 12:42:22 PM 630789404 02-Jul-01 12:42:22 PM 500 3.70 S 1056 02-Jul-01 12:42:22 PM 630789404 02-Jul-01 12:42:22 PM 500 3.70 S 1056 02-Jul-01 12:42:22 PM 630789384 02-Jul-01 12:40:22 PM 500 3.70 B 1057 02-Jul-01 12:42:22 PM 630789393 02-Jul-01 12:41:10 PM 500 3.70 B 1057 02-Jul-01 12:42:22 PM 630789404 02-Jul-01 12:42:22 PM 500 3.70 S 1058 02-Jul-01 12:42:22 PM 630789397 02-Jul-01 12:41:37 PM 500 3.70 B 1058 02-Jul-01 12:42:22 PM 630789404 02-Jul-01 12:42:22 PM 500 3.70 S 1059 02-Jul-01 12:42:22 PM 630789404 02-Jul-01 12:42:22 PM 500 3.70 S 1059 02-Jul-01 12:42:22 PM 630789398 02-Jul-01 12:41:47 PM 500 3.70 B 1060 02-Jul-01 12:42:22 PM 630789400 02-Jul-01 12:41:59 PM 500 3.70 B 1060 02-Jul-01 12:42:22 PM 630789404 02-Jul-01 12:42:22 PM 500 3.70 S 1061 02-Jul-01 12:42:22 PM 630789401 02-Jul-01 12:42:11 PM 1000 3.70 B 1061 02-Jul-01 12:42:22 PM 630789404 02-Jul-01 12:42:22 PM 1000 3.70 S 1062 02-Jul-01 12:42:29 PM 630789406 02-Jul-01 12:42:29 PM 500 3.70 S 1062 02-Jul-01 12:42:29 PM 630789389 02-Jul-01 12:40:46 PM 500 3.70 B 1063 02-Jul-01 12:42:29 PM 630789384 02-Jul-01 12:40:22 PM 500 3.70 B 1063 02-Jul-01 12:42:29 PM 630789406 02-Jul-01 12:42:29 PM 500 3.70 S 1064 02-Jul-01 12:42:29 PM 630789393 02-Jul-01 12:41:10 PM

Source: SecMarx — sebi:WTM/GA/1/ERO/4/07. 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.