sebi:WTM/PS/IVD/ID-3/03/Sept/09
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Certificates of registration of both brokers suspended for a period of one month (reduced from two months recommended by the enquiry officer).
Provisions invoked
- s. 19
Regulations
- Reg. 7
- Reg. 4
- Reg. 4(a)
- Reg. 5
- Reg. 28(2)
- Reg. 23
- Reg. 38(2)
Parties
- M/s. Porecha Global Securities Pvt. Ltd. (PGSPL)
- Shri Arun Porecha (AP)
Holding
The brokers PGSPL and AP were held to have violated Regulation 4(a), (b) & (c) of the PFUTP Regulations, 1995 and Regulation 7 read with Clauses A(1)-(5) of the Code of Conduct under the Brokers Regulations by indulging in structured/synchronized trades in the scrip of MTL. Their certificates of registration were suspended for one month.
Full text
Page 2 of 14 August–November, 2000 at BSE. The investigation covered the transactions conducted during August 28, 2000 to November 11, 2000 (hereinafter referred to as investigation period).
Page 3 of 14 their respective letters dated January 30, 2009. An opportunity of personal hearing was granted to them on August 18, 2009 before me during which they appeared and made oral submissions. Vide separate letters dated August 24, 2009, they also made written
Page 4 of 14 synchronized trades per se. If the seller wants to transfer his holding to a buyer of his choice at or near market price through market mechanism, there is nothing wrong and their client being UTI, there was some additional comfort level. (v) They argued that they are professionally managed company having not done proprietary trading of a single share of this company. Had they intended to create artificial volume as alleged, they would have indulged into proprietary trading, off- market dealing, third party trades etc. (vi) They also denied that a large number of synchronized trades were arranged by them or that they were a party in their client’s orders that got matched with counter orders of Jayant Amerchand Kalidas (Clg. no. 301, hereinafter referred to as ‘JAK’). Further there was nothing wrong if two clients – one seller and another buyer – want to execute their orders for transfer of their beneficial ownership through market mechanism at pre-decided rates based on prevailing market rates. (vii) That the trades were genuine is established from the fact that deliveries of shares were tendered by the sellers and buyers paid consideration and took the deliveries of MTL shares. They, as a broker could not doubt anything as UTI is a knowledgeable and enlightened institution and their investment in the said shares was not as per their recommendation. (viii) The sellers being closely related to the company by itself is no material to suggest wrong doing on their pa
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Source: SecMarx — sebi:WTM/PS/IVD/ID-3/03/Sept/09. 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.