sebi:WTM/GA/30/ISD/11/05
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Minor penalty imposed: suspension of Certificate of Registration for a period of three months
Provisions invoked
- s. 16
- s. 15
- s. 23
- s. 34
Regulations
- Reg. 7
- Reg. 199
- Reg. 4
- Reg. 5(1)
- Reg. 13(2)
- Reg. 6
- Reg. 13(1)
- Reg. 17(1)
- Reg. 17(1)(i)
Parties
- M/s Swagath Securities Pvt Ltd (INB081010335)
Holding
The broker, M/s Swagath Securities Pvt Ltd, was held to have violated Clause A(2), A(3-4), B(1) of Schedule II under Regulation 7 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 and Clauses (a), (b), and (c) of Regulation 4 of SEBI (Prohibition of Fraudulent and Unfair trade Practices relating to Securities Market) Regulations, 1995, and a minor penalty of suspension of certificate of registration for three months was imposed.
Full text
Page 2 of 16 2 The maximum rise in the price of the scrip took place between November 16, 1999 and March 31, 2000 when the price moved from Rs.275 to Rs.815/-. Thereafter the price fell to Rs. 640/- in September 25, 2000. Subsequently, the face value of the shares changed to Rs. 2/- and the price went up from a level of Rs. 123/- on September 26, 2000 to Rs.171/- during February 2001. The scrip continued to trade at around Rs. 150/- till September 14, 2001 and thereafter in the range of Rs. 170/- till January 2002.
Page 3 of 16 3 b. April 01, 2000 – March 31, 2001 Broker Buy qty % buy to total vol.at exchange Sell qty % Sell to total qty at exchange M’s Securities 161940 18.89 163450 19.07 Sakurthi Finvest 137200 17.31 132950 16.85 Harikrishna Stocks 119450 15.09 122250 15.36 Swagath Securities 119350 14.71 116250 14.32 Gayathri Securities 99600 13.01 99800 13.03 Dagaliya Consultants 77600 9.24 77850 9.25 Eco Stocks/Wyscare 33000 4.07 33000 4.13 Uday Stocks 30500 4.11 31400 4.17 Marlecha Securities 23300 2.72 23300 2.72 Total 849840 99.15% 847620 98.89%
Page 4 of 16 4 During the period, the above ten brokers contributed more than 98% of the trading volume in the scrip of HTL at BgSE. 1.4 Investigation was conducted by SEBI into the affairs of buying, selling and dealings in the scrip of HTL by the members of PSE and BgSE including the said broker under the provisions of SEBI Act and its regulations. Investigations revealed that a set of brokers at PSE and BgSE including the said broker were involved in creation of abnormally high volumes, circular trading, price manipulation and false markets thereby contravening the provisions of SEBI Act and regulations including SEBI (Stock Brokers and Sub-brokers) Regulations, 1992. Investigation brought out the role played by these brokers including the said broker in price rise during the period of investigation through a phalanx of clients introduced by the itinerant and trusted employees of HTL. It was also alleged that the broker failed to observe the ‘Know Your Client’ norms.
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Source: SecMarx — sebi:WTM/GA/30/ISD/11/05. 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.