sebi:WTM/KMA/ERO/IVD/255/04/2010
Facts / Headnote
Suspension of certificate of registration of the stock broker for a period of three months
Provisions invoked
- s. 19
Regulations relied on
- SEBI (PFUTP) Regulations, 2003
- SEBI (PFUTP) Regulations, 2003 — 27(ix)
- SEBI (PFUTP) Regulations, 2003 — 4(2)(a)
- SEBI (PFUTP) Regulations, 2003 — 4(2)(e)
Parties
- M/s Prakash Nahata & Co. [Registration No. INB 030062815], Member, The Calcutta Stock Exchange Limited
Holding
The certificate of registration of M/s Prakash Nahata & Co. is suspended for three months for contravening Regulations 4(2)(a) and 4(2)(e) of the PFUTP Regulations and Clauses A(1) to (4) of the Broker Code of Conduct and for failing to co-operate with the investigating authority, while benefit of doubt is given on Regulation 4(2)(o) and Clause B(4)(a).
Full text
Page 2 of 8 facie contravening Regulations 4(2)(a), 4(2)(e) and 4(2)(o) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the PFUTP Regulations) and Clauses A(1) to A(4) and B(4)(a) of the Code of Conduct specified for stock brokers under Schedule II of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations). It was also alleged that the Broker had failed to co-operate with the investigating authority and therefore liable for an action, in terms of Regulation 27(ix) of the Broker Regulations. Thereafter, SEBI, vide order dated March 18, 2008 read with a subsequent
Page 3 of 8 stated that it had registered all its clients before trading on their behalf. In view of the above submissions, the Broker requested not to take any action against it. Though, the Broker was advised to indicate whether it required any personal hearing, no response in that regard was received by SEBI. In view of the above, I do not consider it necessary to provide an opportunity of hearing to the Broker and the present proceedings is being considered on the basis of the available material on record including the submissions made by the Broker, vide letter dated March 18, 2010.
Page 4 of 8 the show cause notice dated May 14, 2008. The Broker had traded substantially in the shares of the company during the investigation period. Most of the trades of the Broker were in the nature of cross deals. The pertinent factor was that 83% of Broker’s cross deals were executed in its own account from February 4, 2004 to September 23, 2004, as given below:
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Source: SecMarx — sebi:WTM/KMA/ERO/IVD/255/04/2010. 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.