sebi:WTM/SR/SEBI/EFD/198/12/2015
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Facts / Headnote
Warning issued; enquiry proceedings disposed of
Provisions invoked
- s. 19
Regulations
- Reg. 7
- Reg. 4
- Reg. 4(b)
- Reg. 28(2)
- Reg. 24
- Reg. 28(1)
Parties
- Khandwala Securities Ltd
Holding
The Noticee was found to have violated Regulation 4(b), (c), (d) of PFUTP Regulations, 1995 and Clause A(1)-(5) of the Brokers Code of Conduct read with KYC circulars, but the matter was allowed to rest with a strong warning to be careful and cautious in future.
Full text
Page 2 of 20 revealed that the Noticee had executed structured/synchronized trades and various cross deals in the scrip on behalf of its clients, and, thereby, aided and abetted its clients in the creation of false market in the scrip. It was also observed that the Noticee had given advance pay-out of the sales proceeds to the clients who were related to DSQ and also led to the creation of false market in the scrip by executing transactions without the intention to transfer the beneficial interest in the security.
Page 3 of 20 that Noticee had violated SEBI Circular no. SMD-1/23341 dated November 18, 1993, SMD/POLICY/IECG/1-97dated February 11, 1997 and SMD/POLICY/CIRCULAR/5-97 dated April 11, 1997 by not following the necessary procedures for client registration.
Page 4 of 20 letter dated January 01, 2014, the Noticee sought for a personal hearing in the matter and the same was granted on February 12, 2014. Mr. Paresh Khandwala, Managing director, Mr. Pranav Khadwala, Director, Mr. Vinay Chauhan, Advocate and Mr. Prashant Ingle, Advocate appeared for the Noticee and made oral submissions. The Noticee was also directed to submit additional written submissions, if any, by February 19, 2014. The Noticee vide letters dated February 21, 2014 and March 12, 2014 submitted inter alia as under: a) "At the outset, we deny all the allegations levelled against us in the Notice. It is categorically denied that we have violated the provisions of Regulation 4 (b), (c), (d) of PFUTP Regulations and Clause A (1),(2),(3),(4) and (5) of Schedule II of the Regulation 7 of the Brokers Regulations read with SEBI Circular no. SMD-1/23341 dated November 18, 1993, SMD/ POLICY/ IECG/ 1-97 dated February 11, 1997 and SMD/ POLICY/CIRCULAR/5- 97 dated April 11, 1997 as alleged. We have not indulged in any fraudulent and unfair trade practices relating to the securities so as to warrant any kind of punitive directions. The findings in the Enquiry Report are totally unfounded and a product of confused reasoning. b) We specifically repeat, reiterate and confirm the submissions made by us in our various replies/submissions including reply dated December 03, 2012 to the enquiry Notice dated March 30, 2012 issued by the Designated Authority in the proceedings and the s
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Source: SecMarx — sebi:WTM/SR/SEBI/EFD/198/12/2015. 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.