sebi:WTM/PS/78/IVD/ID-04/FEB/2011
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Facts / Headnote
Certificate of registration of stock broker Pal Overseas Pvt. Limited (INB 011143436) suspended for a period of two months; Enquiry Officer's recommendation of twelve months suspension reduced in interest of justice and equity.
Provisions invoked
- s. 19
Regulations
- Reg. 7
- Reg. 4
- Reg. 5(1)
- Reg. 13(2)
- Reg. 4(b)
- Reg. 28(2)
- Reg. 13(1)
- Reg. 38(2)
Parties
- Pal Overseas Pvt. Limited
Holding
The noticee, Pal Overseas Pvt. Limited, was held to have aided and abetted its clients in creating artificial liquidity/false market in the scrip of Sunearth through 119 structured trades, and to have failed to exercise due care and diligence as a registered stock broker. Its certificate of registration was suspended for two months.
Full text
Page 2 of 10 3. Investigation revealed that Sunearth was in need of funds to expand its business and therefore, its directors wanted to pledge the shares of the company with financial institutions. In order to raise finance by pledging of shares, it was necessary for Sunearth to have liquidity in the scrip. SEBI found that most of the entities who had traded in the scrip during the investigation period were inter-related and connected to Mr. Suresh Motwani, Managing Director of Sunearth. Onlooker Investments Pvt. Ltd. (hereinafter referred to as ‘Onlooker’), Habiscus Investments Pvt. Ltd. (hereinafter referred to as ‘Habiscus’), Alkan Projects Pvt. Ltd. (hereinafter referred to as ‘Alkan’), Mayfair Realtors Pvt. Ltd. (hereinafter referred to as ‘Mayfair’), M’Belle International Pvt. Ltd. (hereinafter referred to as ‘M’Belle’), Jaydeep Investments Pvt. Ltd. (hereinafter referred to as ‘Jaydeep’) and New Bharat Builders Pvt. Ltd. (hereinafter referred to as ‘New Bharat’) were the different entities who entered into structured trades through separate brokers in order to reflect artificial liquidity in the scrip.
Page 3 of 10 and Sub-Broker) Regulations, 1992 (hereinafter referred to as ‘Broker Regulations’). The Enquiry Officer submitted his Report dated March 30, 2005, in terms of Regulation 13(1) of the Enquiry Regulations recommending thereby a penalty of suspension for a period of twelve months to the noticee for violating the provisions of Regulation 4 of PFUTP Regulations and Clauses A(2) of the Code of Conduct prescribed for Stock Brokers in Schedule II under Regulation 7 of Broker Regulations.
Page 4 of 10 written submissions which was granted to it. The noticee filed its written submissions vide its letter dated October 15, 2010, which have been taken on record.
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Source: SecMarx — sebi:WTM/PS/78/IVD/ID-04/FEB/2011. 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.