sebi:WTM/KMA/IVD/279/07/2010
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Facts / Headnote
Interim directions issued against Dynamic Stock Broking (India) Private Limited vide ex-parte interim Order dated April 23, 2009 confirmed; stock broker restrained from entering into fresh agreements with new clients till further orders.
Provisions invoked
- s. 19
Parties
- Dynamic Stock Broking (India) Private Limited
Holding
SEBI confirmed the ex-parte interim directions restraining Dynamic Stock Broking (India) Private Limited from entering into fresh agreements with new clients, pending completion of investigation and satisfaction of the broker's bonafides.
Full text
Page 2 of 6 submissions made by the stock broker, the directions issued by SEBI, vide the Order against it need to be continued, revoked or modified in any manner. The circumstances which led to the passing of the Order had been mentioned in detail therein. The investigation in the matter of PSTL, prima facie revealed the operation of a widely distributed network of persons/entities who had joined hands in breaching market integrity by manipulating the shares of PSTL, forging a letter purported to be issued by SEBI to Mr. P.S. Saminathan (promoter of PSTL), publicizing its contents and the manipulators taking benefit of the artificial price rise caused by the said letter and selling of their substantial stake in the market, to their advantage and to the detriment of the unsuspecting investors. There were other persons/entities who appeared to have played their role in various capacities such as publicizing the contents of the forged SEBI letter, routing funds through various layers, offloading substantial shares at an artificial inflated price on December 22, 2008 etc.
Page 3 of 6 Mr. Raju Shah’s account on November 4, 2008, was received in the account of Mr. Nigam Vinod Shah prior to the said transfer from Mr. Rajesh Jani. Though, Mr. Rajesh Jani had stated during the investigation that the said payments to Mr. Nigam Vinod Shah were the repayment of the loans taken from him during 2007-2008, the same was not supported by any loan agreement. Further, it was also suspicious as to how Mr. Nigam Vinod Shah, having disclosed an annual family income of only Rs.50,000/- in his Know Your Client (KYC) documents, could advance a loan of Rs.25,00,000/-. It was further noted during the
Page 4 of 6 dealings and financial transactions by and between Mr. Rajesh Jani and the other entities may have been carried out in his individual capacity and not in the capacity as its director or on behalf of the stock broker. The stock broker further submitted that the transactions carried out by Mr. Rajesh Jani cannot and should not in any way jeopardize its rights in any manner and that it does not stand responsible for any acts of omissions or commissions, if any, by any of its directors in their individual capacities and that no adverse inference could be drawn against them for the same. As regards the uncleared debits in the account of Mr. Nitin Garodia maintained with it, the stock broker submitted that no adverse inference can be drawn on the same and further submitted that due to the delay in paying monies, shares were not released until payment was received from Mr. Nitin Garodia. With respect to the transfers from the account of Mr. Rajesh Jani to that of Mr. Nigam Vinod Shah and Mr. Janak H. Chitalia, the stock broker submitted that the same pertains to that of its director Mr. Rajesh Jani. As regards the fact that Mr. Nigam Vinod Shah had advanced Rs.25,00,000/- to Mr. Rajesh Jani when his family income was low and without a loan agreement, the stock broker submitted that it was not a party to any of the said transactions. As regards the alleged linkages and transactions as mentioned in paragraph 64 of the Order, the stock broker submitted that it is not aware
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Source: SecMarx — sebi:WTM/KMA/IVD/279/07/2010. 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.