sebi:WTM/KMA/IVD-ERO/18/11/2008
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Enquiry proceedings disposed of; violations of FUTP Regulations 4(2)(a) and 4(2)(e) and Clauses A(1) to A(4) of Schedule II of Broker Regulations established, but no further penalty imposed.
Provisions invoked
- s. 19
Regulations
- Reg. 4(2)
- Reg. 28(2)
- Reg. 4(2)(a)
Parties
- Mr. Dinesh Kumar Lodha
Holding
The Broker, Mr. Dinesh Kumar Lodha, was found to have violated Regulations 4(2)(a) and 4(2)(e) of the FUTP Regulations and Clauses A(1) to A(4) of the Code of Conduct under Schedule II of the Broker Regulations by executing matched/synchronized trades that created a misleading appearance of trading. However, no further penalty was imposed on the Broker.
Full text
Page 2 of 11 Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the FUTP Regulations) and the provisions of Securities and Exchange Board of India (Stock Brokers and Sub- Brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations). In the facts and circumstances, in order to protect the interest of investors, SEBI, vide an ad- interim ex parte order dated November 30, 2005 inter alia directed various entities/stock brokers, including the stock broker namely, Mr. Dinesh Kumar Lodha (Member, CSE) not to buy, sell or deal in securities, in any manner, either directly or indirectly, till further directions. SEBI, after affording an opportunity of hearing to the aggrieved persons, vide order dated May 31, 2006, confirmed directions passed vide ad interim order dated November 30, 2005, as stated therein.
Page 3 of 11 vide order dated September 26, 2006 read with a subsequent order dated November 23, 2007, SEBI appointed an Enquiry Officer under the then existing provisions of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as Enquiry Regulations). In the meanwhile, SEBI, vide order dated August 11, 2008, for the reasons stated therein, vacated the directions passed vide interim orders dated November 30, 2005 and May 31, 2006, as against the stock brokers. Thereafter, the Enquiry Officer/Designated Authority (hereinafter referred to the as the Enquiry Officer), vide report dated October 24, 2008 recommended the suspension of the certificate of registration of the Broker for a period of six months. However, the Enquiry Officer, further recommended to set off the said period of six months against the period of prohibition already undergone by the Broker in terms of the above mentioned interim orders of SEBI. Subsequently, SEBI, vide letter dated October 30, 2008 issued a notice to the Broker to show cause as to why action should not be taken against him as recommended by the Enquiry Officer or as it considered appropriate. A copy of the Enquiry Report was also forwarded to the Broker along with the said notice. The Broker was also advised to inform SEBI, whether he desired to avail an opportunity of hearing. The Broker vide letter dated November 10, 2008 inter alia stated th
Page 4 of 11 3. I have considered the Report of the Enquiry Officer, the show cause notice issued to the Broker, the letter of the Broker dated November 10, 2008 and other materials available on record. The issue for consideration in the present matter is whether the Broker violated the provisions of FUTP Regulations and the Broker Regulations, as observed by the Enquiry Officer. It is not in dispute that the average share price of the company at CSE had increased from Rs.20.80- to Rs.88/- (a rise of 323%) during the relevant period. The stock brokers namely Mr. Pramod Kumar Kothari, Mr. Purshottam Lal Kejdiwal, Mr. Santosh K. Kejdiwal, Mr. Dinesh Kumar Lodha and Mr. Sanju Kabra collectively executed trades involving 4,08,800 shares in the company during the relevant period. The said trades accounted for approximately 93% of the total volume in the shares of the company (during the relevant period). The trade details of the Broker in the shares of the company at CSE during the relevant period are as follows:
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-ERO/18/11/2008. 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.