sebi:WTM/GA/5/ISD/4/07

SEBI · SEBI · 1999-10-01 · 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

Order passed against the Broker finding violations of FUTP Regulations, Broker Regulations (Code of Conduct), NSE Rules/Regulations and BSE Bye-laws; specific penalty terms not fully reproduced in the excerpt

Provisions invoked

• s. 19
• s. 200

Regulations

• Reg. 4
• Reg. 13(4)
• Reg. 5(1)
• Reg. 13
• Reg. 4(a)
• Reg. 47

Parties

• M/s. Dresdner Klienwort Benson Securities (India) Ltd. (DKB)

Holding

The Broker (Dresdner Klienwort Benson Securities (India) Ltd.) was held to have violated the FUTP Regulations, the Code of Conduct under Schedule II of the Broker Regulations, Rule 4(d) & (e) of NSE Rules, Regulations 4.5.4(c) and 4.6.2 of NSE Regulations, and Bye-laws 356 and 357 of BSE Bye-laws, by executing substantial synchronized (matching) trades in the shares of the company with other stock brokers on behalf of clients connected to the promoter group, thereby creating a misleading appearance of trading, artificial volume and price.

Full text

Page 2 of 43 National Stock Exchange of India Ltd. (hereinafter referred to as NSE) and the Bombay Stock Exchange Ltd. (hereinafter referred to as BSE), moved from Rs. 255/- to Rs. 2631/- during the period between October 1, 1999 and March 31, 2000. Thereafter, the share price reached Rs. 149/- on March 31, 2001 from Rs. 1499/- on April 1, 2000. 1.2 In view of the aforesaid unusual price movement, SEBI conducted investigations into the possible market manipulation/ irregularities in the trading in the shares of the company to look into the possible violation of inter alia the provisions of the 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) and Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations) by various entities/stock brokers. It has been alleged that the promoters/ directors of the company generated funds by trading in the shares of the company through their associates and that large quantities of the shares of the company were sold by the associates of the company through a set of stock brokers at NSE and BSE. The aforesaid shares were bought back by the associates of the company at the same time through different set of stock brokers. It has been alleged that the said trades were artificial and synchronized. 1.3 The investigation conducted b

Page 3 of 43 associates of the company) during the period October 1999 to March 2001. The Broker had also executed synchronized trades in the shares of the company with other stock brokers registered with SEBI. 1.4 The synchronized trade details of the Broker in the shares of the company with various stock brokers are as follows: i. Trades executed with Accord Capital Markets Ltd. (Member, NSE)

Page 4 of 43 16-May-00 20000516 0065149 10:09: 36 AM 603.50 25000 10:10:04 Mehta & Ajmera DKB 20000516 0066880 10:10:04 AM 603.50 20000 DSQ H 16-May-00 20000516 0066787 10:10: 03 AM 603.50 20000 10:10:04 Mehta & Ajmera DKB 20000516 0066880 10:10:04 AM 603.50 20000 DSQ H 29-May-00 20000529 0104768 10:21: 04 AM 562.00 25000 10:21:05 Mehta & Ajmera DKB 20000529 0104795 10:21:05 AM 562.00 25000 DSQ H 01-Jun-00 20000601 0034685 10:01: 55 AM 723.50 25000 10:01:55 Mehta & Ajmera DKB 20000601 0034448 10:01:52 AM 723.50 25000 DSQ H 05-Jun-00 20000605 0144973 10:33: 49 AM 973.00 25000 10:33:49 Mehta & Ajmera DKB 20000605 0144960 10:33:49 AM 973.00 25000 DSQ H 05-Jun-00 20000605 0148310 10:34: 37 AM 977.00 25000 10:34:37 Mehta & Ajmera DKB 20000605 0148274 10:34:37 AM 977.00 25000 DSQ H 05-Jun-00 20000605 0150604 10:35: 11 AM 977.00 25000 10:35:13 Mehta & Ajmera DKB 20000605 0150743 10:35:13 AM 977.00 25000 DSQ H 05-Jun-00 20000605 0153008 10:35: 46 AM 977.00 25000 10:35:46 Mehta & Ajmera DKB 20000605 0153000 10:35:46 AM 977.00 25000 DSQ H 05-Jun-00 20000605 0162730 10:38: 26 AM 966.00 25000 10:38:26 Mehta & Ajmera DKB 20000605 0162704 10:38:25 AM 966.00 25000 DSQ H 05-Jun-00 20000605 0164823 10:39: 01 AM 964.00 25000 10:39:01 Mehta & Ajmera DKB 20000605 0164798 10:39:00 AM 964.00 25000 DSQ H 05-Jun-00 20000605 0166310 10:39: 25 AM 964.50 25000 10:39:25 Mehta & Ajmera DKB 20000605 0166259 10:39:25 AM 964.50 25000 DSQ H 05-Jun-00 20000605 0172439 10:41: 11 AM 964.00 25000 10:41:11 Mehta

Source: SecMarx — sebi:WTM/GA/5/ISD/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.