sebi:WTM/GA/15/ISD/6/07
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Provisions invoked
- s. 19
- s. 25
Regulations
- Reg. 4
- Reg. 4(b)
- Reg. 13(4)
- Reg. 5(1)
- Reg. 13
- Reg. 47
- Reg. 4(d)
- Reg. 4(c)
Parties
- Woodstock Securities Pvt. Ltd.
- Woodstock Broking Pvt. Ltd.
- Omega Equities Pvt. Ltd.
Holding
The Enquiry Officer found Woodstock Securities Pvt. Ltd., Woodstock Broking Pvt. Ltd. and Omega Equities Pvt. Ltd. violated Regulations 4(b) and (c) of the FUTP Regulations, Clauses A(1) to (4) of the Broker Code of Conduct and the SEBI circular dated September 14, 1999, and recommended suspension of registration for twelve months. The deciding authority rejects the procedural objection and sustains the synchronized-trade analysis against the brokers.
Full text
Page 2 of 55 1.0 BACKGROUND 1.1 The shares of DSQ Software Ltd. (hereinafter referred to as the company), formerly known as Square D Software Ltd., are inter alia listed at the National Stock Exchange of India Ltd. (hereinafter referred to as NSE) and Bombay Stock Exchange Ltd. (hereinafter referred to as BSE). The company was originally incorporated on March 6, 1992 as M/s. Square D Software Limited with its registered office at Kolkata. Thereafter, the registered office of the company was shifted from Kolkata to Chennai with effect from August 16, 1994. The name of the company was subsequently changed from M/s. Square D Software Limited to M/s. DSQ Software Limited with effect from April 01, 1997.
Page 3 of 55 confirmed by SEBI, vide order dated December 20, 2001 after giving reasonable opportunity of hearing. 1.4 The investigation conducted by SEBI inter alia found that Shri Dinesh Dalmia had fraudulently allotted 1.7 crore shares of the company to its group / associate entities. Out of the above, around 1.3 crore shares of the company were off loaded in the securities market by the group / associate entities of Shri Dinesh Dalmia viz. Hulda Properties and Trades Ltd., Powerflow Holdings Ltd., DSQ Holdings Ltd. and DSQ Industries Ltd. etc. before the listing of the said shares. The market value of the said 1.3 crore shares of the company was found to be around Rs.630 crores, calculated by taking into account the average price of the shares of the company at the relevant time. Thus, the promoters/ directors of the company generated funds by trading in the shares of the company through their associates. The above mentioned associates of Shri Dinesh Dalmia sold large quantities of the shares of the company through a set of stock brokers at NSE and BSE and the said shares were bought back by the said associates at the same time through different set of stock brokers inter alia by way of synchronized trades. It is further seen that the stock brokers through which the aforesaid sales were done, made payment to the sellers (associates of the company) even before they received the pay out from the clearing corporation, and that to cover the same, the rate of brokerage was adj
Page 4 of 55 Dalmia was further prohibited from holding any office of responsibility in a company/entity or other institution associated with the securities market for a period of 10 years. In the said order, SEBI had also passed the following directions:
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Source: SecMarx — sebi:WTM/GA/15/ISD/6/07. 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.