sebi:WTM/PS/40/IVD/ID-03/FEB/10
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Facts / Headnote
Warning issued to the noticee to be careful and cautious
Provisions invoked
- s. 19
Regulations
- Reg. 5(1)
- Reg. 28(2)
- Reg. 27
- Reg. 28(1)
- Reg. 38(2)
Parties
- Khandwala Integrated Financial Services Pvt. Ltd.
Holding
SEBI warned Khandwala Integrated Financial Services Pvt. Ltd. (INB 230776034), member, National Stock Exchange, for violating the Code of Conduct under Schedule II of the Broker Regulations by failing to exercise due skill, care and diligence for its related clients, while the PFUTP charge was dropped.
Full text
Page 2 of 6 Kinnari Khandwala in the scrips of VIP Industries, Archies Industries Ltd., BGFL, Amaraja Battery and Dabur, were surrounded around the tips/ investment advice given on the Valuenotes by a stock analyst namely Mr. Anirudh Sethi. Further, the clients of the noticee were found to have hands in glove with Anirudh Sethi and used the strategy of pump and dump, thereby leaving the genuine investors stranded with the scrips while the perpetrators had exited the scrips. This strategy had benefited Anirudh Sethi in getting mileage from the fact of some buying activity prior to his recommendations so that the investors could be lured by the impending price rise in the scrip.
Page 3 of 6 Kamal Dalal and Ms. Kinnari Khandwala was found to be aided by the noticee. 5. Based on the findings of the investigations, SEBI initiated enquiry proceedings as against the noticee in terms of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as ‘Enquiry Regulations’), by appointing an Enquiry Officer under Regulation 5(1) of Enquiry Regulations vide order dated September 05, 2006 and subsequent order dated July 19, 2007. SEBI appointed the Enquiry Officer, to enquire into the alleged violation of the provisions of the PFUTP Regulations and Broker Regulations. As the Enquiry Regulations were repealed with effect from the notification of SEBI (Intermediaries) Regulations, 2008, the Enquiry Officer/ Designated Authority (hereinafter referred to as the Enquiry Officer) submitted his Report dated December 12, 2008, in terms of Regulation 27 of SEBI (Intermediaries) Regulations, 2008 recommending thereby warning to noticee for violating the Code of Conduct specified under Schedule II of the Broker Regulations.
Page 4 of 6 vide its letter dated October 05, 2009, waived its right for personal hearing and preferred to rely on its earlier replies and submissions.
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Source: SecMarx — sebi:WTM/PS/40/IVD/ID-03/FEB/10. 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.