sebi:WTM/PS/17/EFD/JUNE/2015
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Facts / Headnote
Noticee found to have contravened Section 12A of SEBI Act, Regulations 3 and 4 of PFUTP Regulations and Code of Conduct for stock brokers
Provisions invoked
- s. 19
- s. 12A
- s. 12
Regulations
- Reg. 7
- Reg. 3
- Reg. 199
- Reg. 200
- Reg. 28
Parties
- Karvy Stock Broking Limited
Holding
KSBL (in its capacity as stock broker) was held to have contravened Section 12A(a), (b) and (c) of the SEBI Act, Regulations 3 and 4 of the PFUTP Regulations and Clauses A(1), (3) and (4) of the Code of Conduct for stock brokers.
Full text
Page 2 of 39 referred to as "afferent accounts") in fictitious/benami names and made large number of applications in the IPOs in the category of retail investors (each of the applications being of small value as to make it eligible for allotment under the retail category).These key operators were found to have cornered/acquired the shares issued in the IPOs by using these fictitious accounts. On allotment of shares under the retail category, the same were transferred to the demat accounts of the key operators who subsequently transferred the shares in off-market to ultimate beneficiaries who were the financiers in the IPOs.
Page 3 of 39 prescribed for stock brokers under schedule II of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 (hereinafter referred to as “the Stock Broker Regulations”) read with regulation 7 thereof and the provisions of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 (hereinafter referred to as "the DIP Guidelines"). In view of his findings, vide Report dated March 15, 2007, the Enquiry Officer recommended that the certificate of registration granted to KSBL (in its capacity as a stock broker) be suspended for a period of three months.
Page 4 of 39 "..... It is, however, made clear that while passing the fresh orders the wholetime member shall take into account only the material that is already on the record and will not permit either party to produce any fresh material or file fresh replies or written submissions. He will, however, grant a fresh oral hearing to the parties and take into consideration the replies and written submissions already filed. The parties will however be at liberty to cite case law in support of their respective submissions. The wholetime member while passing the fresh orders shall not be influenced by any observation or finding recorded in the impugned order. We also make it clear that we have not decided any issue on merits and, therefore, all the issues raised by the parties remain open to be decided afresh by the learned wholetime member in accordance with law. In case the final order(s) were to go against the appellant(s), the same shall not be given effect to for a period of four weeks from the date of receipt thereof by the appellant(s)." [Emphasis supplied]
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Source: SecMarx — sebi:WTM/PS/17/EFD/JUNE/2015. 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.