sebi:WTM/KMA/IVD/358/02/2011
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Certificate of registration of the stock broker suspended for a period of two weeks, running concurrently with prior suspensions.
Provisions invoked
- s. 19
Regulations
- Reg. 7
- Reg. 4(a)
- Reg. 28(2)
Parties
- CFL Securities Limited
Holding
The stock broker, CFL Securities Limited, was held guilty of contravening Regulation 4(a) and (b) of the PFUTP Regulations and Clause A (3), (4) and (5) of the Code of Conduct for stock brokers, and its certificate of registration was suspended for two weeks.
Full text
Page 2 of 7 broker submitted its response, vide replies dated March 18, 2005 and June 20, 2005. While the instant proceeding was in progress, the stock broker had filed an application for passing of a Consent Order in terms of SEBI Circular dated April 20, 2007 and pursuant to the rejection of the said application, the present proceeding was resumed and the stock broker was granted an opportunity of hearing on July 2, 2009. On the said date of hearing, Mr. Bhupen C. Dalal, Advocate appeared on behalf of the stock broker and made submissions. Mr. Milan B. Dalal, director of the stock broker and Mr. Deepak Sheth were also present in the hearing. The learned advocate while making submissions, requested SEBI to dispose off all proceedings pending against the group entities. The learned advocate also undertook to file written submissions at the earliest. Thereafter, the written submissions of the stock broker was forwarded to SEBI by Mr. Bhupen C. Dalal, Advocate, vide letters dated September 22, 2010 and February 4, 2011. The submissions made by the stock broker are considered and discussed below in this Order.
Page 3 of 7 A. Dalal (trading through Nikko Capital Services Limited, another stock broker), indulged in transactions and were buying and selling at the same time and for the same price and that shares which were sold by them were purchased by them by a scheme of finance.
Page 4 of 7 6.5…….. The modus operandi for the purported financing transactions is that it appears that as a means to arrange finance, the broker and his related and associated entities sold shares as “spot/off market deals” to various entities and would receive funds immediately. The entities, who bought these shares on “spot/off-market” would, in turn, sell these shares on the exchange and would therefore safeguard their interests as they would get covered by the settlement guarantee fund of the exchange. In most of these trades, the purchasing counter party has been found to be one of the related entities of the broker’s group, who had initially sold the shares on a spot/off market basis. The above cycle of sale on spot/off market basis, subsequent sale by the purchasing entities on the market by entering into matched/structured deals with the entities who had initially offered the shares on spot/off market basis, continued settlement after settlement during the time period of investigation. It appears, therefore, that the trading which took place on the exchanges, during the time period of investigation, was mirroring the financing arrangements which had crystallized outside the exchange as spot/off market deal. Most of the transactions, which took place during this time period, were crossed and matched/structured between broking entities, who were directly/indirectly a party to the financing transactions. Therefore, these matched/structured transactions were entered into
You have read the preview. Create a free account to read the full order, track this party, and analyse it in Ontology.
Free accounts include 10 searches/day with full order access.
Source: SecMarx — sebi:WTM/KMA/IVD/358/02/2011. 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.