sebi:WTM/RKA/IVD/69/2012
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Warning issued to the stock broker
Provisions invoked
- s. 11
- s. 19
Regulations
- Reg. 7
- Reg. 28(2)
Parties
- M/s. Ramrakh Bohra
Holding
The Broker did not act with due care, skill and diligence in the conduct of his stock broking business and thus did not abide by Clause A(2) of the Code of Conduct for stock brokers, but was given benefit of doubt on the charge of aiding and abetting creation of artificial volumes. A warning was issued to the Broker rather than a monetary penalty or suspension.
Full text
Page 2 of 7 (hereinafter referred to as the "the PFUTP Regulations") and Clause A (2) of the Code of Conduct for stock brokers read with regulation 7 of the SEBI (Stock Brokers and Sub- brokers) Regulations, 1992 (hereinafter referred to as "the Stock Brokers Regulations"). By the said order, SEBI suspended the Broker's certificate of registration for a period of one month.
Page 3 of 7 d) The transactions that took place through the terminal of the Broker resulted in delivery and/or payments, thus giving no cause to the Broker to be concerned or to apply any counter checks and balances beyond reasonable prudence. e) Relying upon the order dated November 21, 2006 of the Hon'ble SAT in the matter of Latin Manharlal Securities Pvt. Ltd., Broker submitted that SEBI failed to provide clear and unequivocal evidence of aiding and abetting by him. f) The client of the Broker purchased shares through the terminal of the Broker. Merely on this basis, alleging synchronised trades by the Broker is highly improbable and unrealistic to the extent that the Broker had no prior understanding either with the counter-party broker or the client more so when his client was taking deliveries of the purchases made by him. The charge of circular trading could be established if it is proved that there was a nexus between the stock broker with his client and the counter-party selling stock broker. g) When the Broker became aware of the alleged wrong-doing of his client from the BSE, he discontinued and stopped all dealings with client. h) Mr. Ashok Jain is the sub-broker of the Broker and therefore there is no prohibition for the Broker to extend the trading terminals to his sub-broker. No special favour was therefore shown on his sub-broker. During the cross- examination Mr. Ashok Jain has also confirmed that in his statement dated May 13, 2004, when he had stated that
Page 4 of 7 one week from the date of hearing. However, after a reminder by SEBI, the Broker vide letter dated September 10, 2012, furnished only the copy of the client ledger statement of Mr. Ashok Jain.
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Source: SecMarx — sebi:WTM/RKA/IVD/69/2012. 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.