sebi:WTM/RKA/IVD/03/2014
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Facts / Headnote
SCN disposed of; noticee given benefit of doubt, no action taken
Provisions invoked
- s. 11
- s. 19
Regulations
- Reg. 7
- Reg. 3
- Reg. 13
- Reg. 4(b)
- Reg. 200
- Reg. 13(2)
- Reg. 13(3)
- Reg. 27
- Reg. 28(1)
- Reg. 13(1)
- Reg. 5(1)
Parties
- M/s. H B Securities Ltd.
Holding
The Whole Time Member held that the preponderance of probability in the case was in favour of the noticee, M/s. H B Securities Ltd., and accordingly gave it the benefit of doubt without taking any action as contemplated in the SCN.
Full text
Page 2 of 12 investigations, the proceedings were initiated against the noticee under the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Page 3 of 12 personal hearing was granted to the noticee on November 27, 2013 before me when authorised representative of the noticee appeared and made oral submissions. Vide letter dated December 10, 2013, the noticee made written submissions after personal hearing. The submissions of the noticee are inter alia as under: (a) The DA has disregarded the issues in the Report such as i. Several crucial documents relied upon in the proceedings were not provided despite the noticee's various requests; ii. The investigation period has remained un-defined till date. The Report mentions that the trading pattern of Ceat for the time period January 5, 2000 to February 22, 2000 was examined. The period from March 2001 to May 2001 is thus beyond the period of investigation. (b) Investigation Order and appointment of Enquiry Officer were not valid. (c) The entire proceedings suffer from inordinate delays which are against the principles of natural justice. The show cause notice issued by the DA (pre-enquiry SCN) and proceedings commenced by the same were bad in law. This SCN was otherwise time barred since it has been issued more than 3 years after the alleged contraventions. The pre-enquiry SCN was completely vague, ambiguous, unspecific and full of contradictions. (d) At the time of the transaction in question, the PFUTP Regulations, 1995 were existing and applicable. These regulations were repealed on July 17, 2003. Since no proceedings were initiated under the PFUTP Regulations, 1995
Page 4 of 12 many of the counterparty clients and where the actions have been initiated against its clients RRB and Har Sai, both have been exonerated vide SEBI order dated September 24, 2010. (h) The allegation that all the clients mentioned in the table were direct clients and maintained running accounts with the noticee and thus the insinuation that their funds were at the disposal of the noticee is baseless and without any document on record to substantiate it. (i) The allegations of there being any “modus operandi” adopted by the noticee for conducting structured deals is based on nothing but conjectures and surmises. It is once again reiterated that the transactions were genuine and not structured or matched. All the transactions were payment and delivery based transactions. (j) There are no allegations that the transactions of the noticee had caused injury or loss to any investor, or that any malicious motive or undue benefit was attached to the transactions (k) It is wrong to suggest that there were too many transactions over too long a period. Material on record shows that the impugned transactions of the noticee took place between March 14, 2001 and April 27, 2001 on 8 days, out of which, transactions on April 10, 2001 wherein UBS Warburg was the counterparty broker were accepted to be genuine. Out of total 31 buy / sell orders of the noticee, 12 transactions pertaining to UBS Warburg were accepted to be genuine trades, effectively leaving 19 trades. (l) Synchronise
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Source: SecMarx — sebi:WTM/RKA/IVD/03/2014. 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.