sebi:WTM/KMA/NRO/IVD/273/06/2010
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Facts / Headnote
Certificate of registration suspended for a period of two weeks, effective on expiry of twenty one days from the date of order
Provisions invoked
- s. 19
Regulations
- Reg. 4(a)
- Reg. 28(2)
- Reg. 38(2)
Parties
- Vikas Holdings Private Limited (Registration no. INB 050564337), Member, Delhi Stock Exchange Limited
Holding
The stock broker, Vikas Holdings Private Limited, was found guilty of contravening Regulation 4(a) and (b) of the PFUTP Regulations and Clauses A(1) to (5) of the Code of Conduct in Schedule II of the Stock Brokers Regulations, and its certificate of registration was suspended for two weeks.
Full text
Page 2 of 6 Clauses A(1) to (5) of the Code of Conduct specified in Schedule II of the 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 initiated enquiry proceedings, vide order dated July 15, 2004, against the stock broker under the provisions of the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (since repealed). The Enquiry Officer, vide Report dated April 21, 2005 while finding the stock broker guilty of the aforesaid provisions, had recommended that its certificate of registration be suspended for a period of four months. Thereafter, a notice dated April 27, 2010 was issued by SEBI to the stock broker enclosing therewith a copy of the Enquiry Report, advising it to show cause as to why action as recommended should not be taken against it. The said notice which was served on the stock broker through the Delhi Stock Exchange Limited (hereinafter referred to as DSE), advised it to file the reply by May 20, 2010 and to appear for a hearing scheduled on May 21, 2010. Though, the stock broker acknowledged the receipt of the notice, it neither submitted any reply nor did it appear for the hearing. As no response is received from the stock broker, I am of the view that further opportunities need not be afforded to the stock broker and that the matter could be proceeded on i
Page 3 of 6 of contribution to the market volumes, the stock broker was found to be the highest contributor. It has been alleged that the stock broker had dealt in the shares of the company on behalf of Mrs. Sunita Devi (who was none other than its director, Mrs. Sunita Kabra) and also on behalf of Mr. Dhiraj Swaroop, with an intention of artificially raising the share price of the company. The investigation conducted by SEBI found that the signature of Mrs. Sunita Devi on the client registration form was the same as that of Mrs. Sunita Kabra in the records of DSE, where she had signed as the director of the stock broker. In view of the same, the investigation had inferred that Mrs. Sunita Devi and Mrs. Sunita Kabra was the same person. It is not in dispute that the share price of the company had increased during the investigation period. It is to be reiterated that the trades of the stock broker had accounted for majority of the trades in the shares of the company during the period of investigation. This was not the only factor which connects the stock broker to the manipulation. There are certain other facts which establish the connection between the stock broker and the company, as given below: a. the earlier address of the registered office of the stock broker was the same as that of the company; b. the auditors for the stock broker and the company were the same; c. Mrs. Vijay Laxmi Kabra was one of the directors of the stock broker. Her husband, Mr. A.K. Kabra was a dire
Page 4 of 6 management as that of the company. Though, the details regarding the names of the above mentioned companies, their directors, the members of the stock exchange and clients involved in the trading of the shares of the aforesaid companies (including the company) along with price movement data were also mentioned in the Enquiry Report, the same remained undisputed before me.
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Source: SecMarx — sebi:WTM/KMA/NRO/IVD/273/06/2010. 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.