sebi:WTM/PS/04/IVD/ID-6/APR/2013
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Facts / Headnote
Show Cause Notice disposed of without any directions; interim and confirmatory orders vacated
Provisions invoked
- s. 19
Regulations
- Reg. 3
Parties
- Fairwealth Securities Limited
Holding
The Show Cause Notice issued to Fairwealth Securities Limited alleging contravention of PFUTP Regulations in the matter of Alka Securities Limited was disposed of without any directions, and the interim and confirmatory orders against it were vacated.
Full text
Page 2 of 14 and Mahesh Kothari Shares and Stock Brokers Limited ("MKSSB") had transferred shares of ASL in off-market transactions to a group of 42 entities (identified as the first level entities) who in turn transferred the shares in off-market transactions to another set of 317 entities (identified as the second level entities) and additional entities [ a total of 69 entities - which included 52 entities who received shares of ASL in off-market from Ashwini Trading Limited (a first level entity) and remaining 17 entities who had purchased shares from Dena Bank as nominees of the promoters of ASL and who had dealt in the shares of ASL in the market ]. Subsequently, the first level entities were found to have received substantial quantity of shares back from the second level and additional entities through transactions in the securities market, out of which a portion of those shares were found to have been transferred to the five promoters. It was observed that the shares which were transferred in off-market by the promoters were utilised in the manipulation of the shares of ASL on the stock exchange. The investigation also observed transactions of large volume of shares of ASL, which were carried out by the first level entities both in off-market as well as on the stock exchange trading platform.
Page 3 of 14 response to the SCN vide letter received by SEBI on July 26, 2011, wherein it inter alia submitted as follows : (i) The noticee is a stock broker of NSE and BSE. (ii) It does not hold any shares of ASL. It neither received any shares from the promoters of ASL in its demat account nor traded in the stock market in the shares of ASL in its proprietary account during the investigation period. (iii) All the alleged transactions in the shares of ASL were carried out by it during the period November 2008 to March 2009 for its three clients, namely, Aidos Trade Limited, Mr. Mahendra Pandey and Mr. P.A. Chorge ("the noticee's clients"), as per the details below :
Page 4 of 14 non receipt of timely payment from the clients. The same is reflected in the ledger of the clients. (vii) On perusal of Annexure C, it can be seen that there are no off-market transactions as alleged, as the shares that are purchased or sold by the said clients are withheld on behalf of respective clients for non-receipt of timely payments and the shares received in pool account are transferred to margin account on behalf of the clients and released from the margin account to the respective clients' demat account after the payments are cleared by the clients. Hence, the said allegation of off-market transactions in respect of market deliveries to the clients is incorrect and ought to be dropped against it. (viii) The noticee's clients traded in the normal course of business and it had placed the orders under instructions from the said clients. All the transactions were market trades and its clients made the sales and purchases by making payments (either partly or fully) or giving delivery of shares (retained in pool account/Client margin beneficiary account) that were sold in the market on different dates and receiving the payment or adjustments, if any against the debit balance in the ledger in the 3 clients' accounts. (ix) The noticee is not connected to the promoters of ASL in any way. It was not aware that Mr. Mahendra Pandey was one of the promoters of ASL. The fact that Mr. Mahendra Pandey is a promoter of ASL came to its knowledge only from the Interim Ord
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Source: SecMarx — sebi:WTM/PS/04/IVD/ID-6/APR/2013. 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.