sebi:WTM/KMA/NRO/IVD/226/02/2010
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Facts / Headnote
Certificate of registration of M/s. Ashok Makker & Co. suspended for a period of three weeks; order to come into force immediately on expiry of twenty one days from the date of the Order.
Provisions invoked
- s. 19
Regulations
- Reg. 28(2)
Parties
- M/s. Ashok Makker & Co.
Holding
The Broker, M/s. Ashok Makker & Co., was held liable for contravening Clause A(1) of the Code of Conduct for stock brokers by issuing contract notes for fictitious, never-executed trades, and its certificate of registration was suspended for three weeks.
Full text
Page 2 of 6 various entities through certain members of the Ludhiana Stock Exchange Limited (hereinafter referred to as LSE) while dealing in the shares of the company. The findings of SEBI was that the shares of the company were illiquid at LSE during 1997 to 1999 and that, a few stock brokers of LSE including M/s. Ashok Makker & Co. (hereinafter referred to as the Broker) were showing significant volumes in the shares of the company in their books. It was found that the shares were shown to have been bought at Rs.2/- to Rs.3/- and were then shown to be sold at Rs.30/- to Rs.35/-. The purported transactions which showed such capital gains were used by the clients to set off other losses. The concerned stock brokers including the Broker were alleged to have facilitated and prompted such fictitious activities and thus, had failed to maintain high standards of integrity, promptitude and fairness in the conduct of its business, thereby contravening Clause A(1) of the Code of Conduct for stock brokers specified under Schedule II of Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 (hereinafter referred to as the Stock Brokers Regulations). In view of the above, SEBI vide order dated June 17, 2004 read with subsequent orders appointed an Enquiry Officer to enquire into the alleged violations committed by the Broker. The Enquiry Officer submitted his report dated November 30, 2009 in terms of the provisions of Securities and Exchange Board of
Page 3 of 6 another opportunity of hearing was granted to the Broker on February 19, 2009. Mr. Ashok Makker, proprietor of the Broker appeared before me and submitted that the Broker is not doing any stock broking business for the past several years. He did not deny the findings of the Enquiry Officer.
Page 4 of 6 Broker, it was inter alia found that one Ravinder Kumar had sold 19,500 shares of the company at Rs. Rs.27.90 per share to the Broker. The copies of those bills were found in the business premises of M/s. Neeraj Aggarwal & Co. (Member, LSE). However, Mr. Ravinder Kumar stated before the Income Tax Department that he had not dealt in any share of the company. In the absence of any specific denial by the Broker regarding the issuance of such bills, I hold the Broker liable for issuing contract notes for trades which were never executed. I also note that during the course of investigation, the Broker was advised to comment in respect of the contract notes issued by it to one Sudarshan Kumar, who allegedly bought 8,500 shares of the company at Rs.2.30 per share on September 17, 1999 and then sold them on March 18, 1999 at Rs.25.65 per share. No comments were offered by the Broker in respect of the same.
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Source: SecMarx — sebi:WTM/KMA/NRO/IVD/226/02/2010. 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.