sebi:WTM/KMA/ERO/IVD/174/11/2009
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Facts / Headnote
Broker found guilty of violating Regulation 4(2)(a) and 4(2)(e) of the PFUTP Regulations and Clauses A(1) to A(5) of the Code of Conduct under Schedule II of the Stock Brokers Regulations; certificate of registration suspended for one month, running concurrently with a prior three-month suspension.
Provisions invoked
- s. 19
Regulations
- Reg. 4
- Reg. 28
- Reg. 4(2)
- Reg. 4(2)(a)
- Reg. 4(2)(o)
Parties
- Subh Stock Broking Private Limited
Holding
The Broker, Subh Stock Broking Private Limited, was held guilty of contravening Regulation 4(2)(a) and 4(2)(e) of the PFUTP Regulations and Clauses A(1) to A(5) of the Code of Conduct prescribed for stock brokers under Schedule II of the Stock Brokers Regulations, and its certificate of registration was suspended for one month.
Full text
Page 2 of 9 Brokers and Sub-brokers) Regulations, 1992 (hereinafter referred to as Stock Brokers Regulations). The investigation conducted by SEBI found that the share price of the company had increased from Rs.23.50/- January 1,2004 to Rs.322/- on August 3,2004 (hereinafter referred to as the investigation period). The investigation conducted by SEBI revealed that certain stock brokers who had executed matched trades in the shares of the company. The investigation had identified four stock brokers, namely, M/s N. M. Lohia & Co., M/s S. Jhunjhunwala & Co., M/s Prakash Nahata & Co. and Subh Stock Broking Private Limited (hereinafter referred to as the Broker) based on their pattern of trading and the volumes contributed by them in the shares of the company during the investigation period. The major findings of the investigation were that most of their (said stock brokers) trades were client to client which have been executed on a single terminal of the same stock broker. The said stock brokers were found to have allowed their clients to simultaneously place both buy and sell orders for the same quantity and price. This consequently, led to the price rise and manipulation in the shares of the company. On the basis of the material collected during the investigations, it was inter alia alleged that the trade practices of the Broker, while dealing in the shares of the company were unfair and fraudulent. The Broker was therefore alleged to have contravened Regulation 4(2)(a), 4(2)(
Page 3 of 9 referred to as the Enquiry Officer), vide Report dated January 28, 2009 observed that the present case is not a fit case for recommending any kind of
Page 4 of 9 Broker contended that its volume never exceeded 29% of the total market volume on the days of its trades and thus it is erroneous to suggest it was responsible for the increase in the share price. The Broker also stated that it had no role in artificially inflating the share price and that it had not indulged in any act which sought to or created false or misleading appearance of trading. Thereafter, an opportunity of hearing was granted to the Broker on November 20, 2009. Mr. Pawan Kayan, Director of the Broker appeared before me on behalf of it and made submissions. He submitted that the Broker had executed trades in the price range of Rs.265/- to Rs.299/- and that it had no nexus with the company or its promoters. He further submitted that, SEBI had already, vide
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Source: SecMarx — sebi:WTM/KMA/ERO/IVD/174/11/2009. 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.