sebi:WTM/SR/IVD/EFD/118/12/2014

SEBI · SEBI · 2011-12-28 · S. Raman, Whole Time Member

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Facts / Headnote

Grishma Securities Private Limited is restrained from buying, selling or otherwise dealing in securities, in its proprietary account, directly or indirectly, for a period of five years, with the restraint/prohibition already undergone for approximately 2 years and 11 months pursuant to SEBI Orders dated December 28, 2011 and July 31, 2013 to be taken into account while computing the period.

Provisions invoked

• s. 19
• s. 12A
• s. 23D
• s. 12(3)

Regulations

• Reg. 7
• Reg. 3
• Reg. 4(1)
• Reg. 26
• Reg. 3(a)
• Reg. 27
• Reg. 28
• Reg. 25
• Reg. 28(1)

Parties

• Grishma Securities Private Limited

Holding

Grishma violated Section 12A of the SEBI Act, PFUTP Regulations and Stock Brokers Regulations by allowing Zala to trade in TPL on listing day without upfront margins, manipulating his client ledger, using third-party and own funds/securities for his margins, executing synchronized trades and facilitating QIB exit, and is therefore restrained from dealing in securities in its proprietary account for five years.

Full text

Page 2 of 35 to offset losses sustained by certain entities/individuals, who allegedly purchased shares from retail allottees/QIBs in the IPO, at a premium to the issue price. The preliminary investigation prima facie also revealed that M/s Grishma Securities Private Limited (hereinafter individually referred to as “Grishma”) inter alia was the stock broker for Jivraj Zala (hereinafter referred to as “Zala”) and had facilitated trading by that entity.

Page 3 of 35 dealing in the securities market till further orders. In this context, I note that enquiry proceedings have been initiated against Grishma under the SEBI (Intermediaries) Regulations, 2008. The restraint imposed on Grishma vide the aforesaid Interim Order in respect of its stock broking business shall continue till the completion of the enquiry proceedings. The enquiry officer shall endeavour to submit the enquiry report to the Competent Authority as expeditiously as possible, without being influenced by the observations and findings in this order, in order to facilitate completion of the enquiry proceedings by passing of a final order by that Authority. ii. Shri Chandrika H. Gandhi, Shri Ketan C. Shah, Shri Chhabil C. Shah and Shri Mihir Ghelani are restrained from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of five years. iii. Patel and Kahor are restrained from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of five years."

Page 4 of 35 Enquiry Proceedings against Grishma – 6.1 During the intervening period, SEBI also initiated Enquiry Proceedings against Grishma, being a registered intermediary, in terms of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 (hereinafter referred to as “Intermediaries Regulations”), by appointing a Designated Authority (hereinafter referred to as “DA”) in respect thereof, vide Communication of Proceeding of Whole Time Member dated March 14, 2013. The DA issued a SCN dated August 6, 2013, which inter alia contained the relevant extracts of the Investigation Report. The DA enquired into the alleged violation of the following provisions of law, viz. –

Source: SecMarx — sebi:WTM/SR/IVD/EFD/118/12/2014. 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.