sebi:WTM/KMA/IVD-ERO/24/12/2008
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Facts / Headnote
Enquiry proceedings disposed of; no further penalty imposed beyond the thirty-two months of prohibition already imposed in interim orders.
Provisions invoked
- s. 19
Regulations
- Reg. 4(2)
- Reg. 28(2)
- Reg. 4(2)(a)
- Reg. 8
- Reg. 4(2)(o)
Parties
- M/s Pramod Kumar Kothari (Registration no. 030059818), Member, Calcutta Stock Exchange Association Limited
Holding
The Broker, M/s Pramod Kumar Kothari, violated Regulations 4(2)(a), 4(2)(e) and 4(2)(o) of the FUTP Regulations and Clauses A(1) to A(4) and B(4)(a) of the Code of Conduct under Schedule II of the Broker Regulations. No further penalty was imposed beyond the thirty-two months of prohibition already undergone under SEBI's interim orders.
Full text
Page 2 of 10 average share price of the company increased from Rs.20.80/- to Rs.88/- (an increase of 323%) during the period May 16, 2005 and November 24, 2005 (hereinafter referred to as the relevant period). It was prima facie observed that some of the stock brokers inter alia with the connivance of various clients executed substantial trades in the shares of the company and thereby prima facie created misleading appearance of trading in securities and ultimately resulted in the manipulation of the share price of the company. SEBI, inter alia, observed that various stock brokers prima facie violated the provisions of Securities and 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 Securities and Exchange Board of India (Stock Brokers and Sub- Brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations). Given 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 stock brokers, including stock broker namely, M/s Promod Kumar Kothari (Member, CSE) not to buy, sell or deal in securities, in any manner, either directly or indirectly, till further directions. Subsequently, SEBI, after affording an opportunity of hearing to the aggrieved persons, vide order dated May 31, 2006, confirmed the directions passed vide ad-inter
Page 3 of 10 observed that the Broker had executed synchronised trades and cross deals in the shares of the company, which accounted for 48% and 43% respectively of his total trades in the shares of the company. The Broker traded when the share price was ranging at around Rs. 20/- and at around Rs 87/-. The above trades of the Broker are prima facie in violation of the provisions of Regulation 4(2)(a),4(2)(e) and 4(2)(o) of the FUTP Regulations and Clauses A(1) to A(4) and B(4)(a) of the Code of Conduct specified in Schedule II of the Broker Regulations. Thereafter, vide order dated September 26, 2006 read with a subsequent order dated November 23, 2007, SEBI appointed an Enquiry Officer under the provisions of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (since repealed). 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. The Enquiry Officer/Designated Authority (hereinafter referred to as the Enquiry Officer for the purpose of brevity) in his report dated October 24, 2008 found that the Broker violated the provisions of Regulation 4(2)(o) of the FUTP Regulations and clause A(2) and B(4) (a) of the Code of Conduct specified under Schedule II of the Broker Regulations. However, the Enquiry Officer observed that the violations of Regula
Page 4 of 10 dated November 13, 2008 inter alia stated that he had already made his submissions vide letters dated April 27, 2007 and March 24, 2008 (to the Enquiry Officer) and that he had nothing to state further in the matter.
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Source: SecMarx — sebi:WTM/KMA/IVD-ERO/24/12/2008. 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.