sebi:WTM/KMA/ERO/IVD/121/08/2009

SEBI · SEBI · 2005-09-29 · Dr. K. M. Abraham, 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

Stock broker strictly warned for violating provisions of law; enquiry proceeding disposed of.

Provisions invoked

• s. 19

Regulations

• Reg. 28(2)
• Reg. 4(2)(a)

Parties

• M/s Purshottam Lal Kejdiwal

Holding

The stock broker M/s Purshottam Lal Kejdiwal was held guilty of contravening Regulation 4(2)(a) and 4(2)(e) of the PFUTP Regulations and Clauses A(1) to A(4) of the Code of Conduct under Schedule II of the Broker Regulations, and was strictly warned.

Full text

Page 2 of 6 Broker Regulations). In order to protect the interest of investors, SEBI, vide an ad-interim ex parte order dated September 29, 2005 inter alia directed various stock brokers not to buy, sell or deal in securities, in any manner, either directly or indirectly, till further directions. Subsequently, SEBI, after affording an opportunity of hearing to the aggrieved persons, vide order dated January 12, 2006, confirmed the directions passed vide ad-interim order dated September 29, 2005, as stated therein. The investigation conducted by SEBI observed that almost the entire trades in the shares of the company during the investigation period were executed by the stock brokers namely, Ms/ Rajendra Prasad Shah, M/s Badri Prasad & Sons and M/s Purshottam Lal Kejdiwal (Members, CSE). It was further observed that M/s Purshottam Lal Kejdiwal executed trades in the shares of the company involving 3,730 shares which accounted for 1.30% of the total volume in the shares of the company traded at CSE during the investigation period. M/s Purshottam Lal Kejdiwal is hereinafter referred to as the Broker. It was observed that the Broker had executed synchronised trades in the shares of the company, which accounted for 100% of its total trades in the shares of the company. The above trades of the Broker were prima facie in violation of the provisions of Regulation 4(2)(a),4(2)(e) and 4(2)(o) of the PFUTP Regulations and Clauses A(1) to A(4) and B(4)(a) of the Code of Conduct specified

Page 3 of 6 referred to as the Enquiry Officer), after considering the facts and circumstances of the case and the materials available on record, submitted the Enquiry Report dated July 10, 2009 recommending the issuance of warning to the Broker. Pursuant to the submission of the Enquiry Report, a notice dated July 16, 2009 was issued by SEBI to the Broker asking it to show cause as to why the penalty as recommended by the Enquiry Officer or as considered appropriate should not be imposed against it. The Broker was also advised to inform whether it would like to avail the opportunity of hearing. The Broker vide letter dated July 18, 2009 inter alia submitted that “ …..we have already given our submission vide letter dated January 14th, 2008 and we have nothing to say more in this matter”. Though, the Broker was specifically advised to inform in case he wished to avail a hearing, no response was made by him in respect of the same. Therefore, I do not consider it necessary to provide an opportunity of hearing to the Broker and the present proceeding is being dealt on the basis of the Enquiry report, the show cause notice dated July 16, 2009 issued to the Broker, its reply dated July 18, 2009 and other material available on record.

Page 4 of 6 4. The investigation conducted by SEBI observed that the trades of the Broker had substantial effect in raising the share price of the company from Rs. 2.10/- to Rs.16.85/- during the period June 09, 2005 to September 16, 2005. The investigation conducted by SEBI observed that all the trades of the Broker were synchronized trades with the stock broker namely M/s Badri Prasad & Sons.

Source: SecMarx — sebi:WTM/KMA/ERO/IVD/121/08/2009. 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.