sebi:WTM/TCN/08/ISD/05/07

SEBI · SEBI · 2006-04-27 · Dr. T.C. Nair, Whole Time Member

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Facts / Headnote

Directions restraining Pratik Stock Vision Private Limited from opening fresh demat accounts discontinued; all issues left open for the Enquiry Officer

Provisions invoked

• s. 11B
• s. 11
• s. 11(4)
• s. 19
• s. 12
• s. 15I
• s. 11C
• s. 12(3)

Regulations

• Reg. 4(e)

Parties

• Pratik Stock Vision Private Limited

Holding

The Whole Time Member held that there was no need to continue the interim direction prohibiting Pratik Stock Vision Private Limited from opening fresh demat accounts, while leaving all substantive issues open for determination by the Enquiry Officer.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER (UNDER SECTIONS 11 AND 11B OF SEBI ACT, 1992) 1.0 Background 1.1.               By an ad interim ex-parte Order dated April 27, 2006 (hereinafter referred to as the ex-parte Order’) under section 19 read with section 11, 11(4) of the Securities and Exchange Board of India Act, 1992 and section 19 of the Depositories Act, 1996 pending enquiry and passing fina certain interim directions were issued against various market participants including Pratik Stock Vision Private Limited (hereinafter referr ‘Pratik’). 1.2.               The ex-parte Order dated April 27, 2006 states that Pratik, Depository Participant of Central Depositories Services Limited (CDSL) and N Securities Depository Limited (NSDL) prima facie appears to have grossly failed in adhering to Know Your Client (KYC) norms laid down b thereby facilitating opening of demat accounts in fictitious/benami names and cornering the retail portion of shares in various Initial Public O (IPOs).  In view of the above preliminary findings Pratik was directed not to open fresh demat accounts till further directions. 1.3             Para 17.18 of the ex-parte Order dated April 27, 2006, stated that the said Order shall be treated as show cause notice against the concerned e named therein including Pratik. These entities were given opportunity to file their objections, if any, to the ex-parte order within 15 days fro date of the ex-parte order a

terminal of Pratik was re-enabled by NSE on July 6, 2005, but Pratik did not commence trading. During the inspection of Pratik, it was stat they did not undertake any broking activity since the arrest of one of its directors. 2.7.2       At para 12.7, as regards the findings relating to account opening , it is stated that Pratik had 3581 active / operative accounts of CDSL and operative accounts of NSDL on December 2005.  Further at para no. 12.8 it is mentioned that 160 accounts out of 293 new accounts opened at during June 2005 were pertaining to Budhwani group. These accounts were opened mainly on June 14, 2005, June 15,2005 and June 16,200 address as B/2 Himalaya Society, Milind Nagar, Asalaf, Ghatkopar (W), Mumbai 400084. During the month of June and July 2005 a large num accounts were opened by Pratik. Majority of these accounts were pertaining to Purshottan Budhwani Group. While the accounts which were by Pratik were pertaining to various groups such as Kamla Bordia, Bajaj group, Dhanuka group, Sheth group etc. These groups were consequent to SEBI’s Order in the matter of Yes Bank Ltd. 2.7.3       At para 12.10 of the Order, it is stated that after scrutiny of Know Your Client and Account Opening Forms/documents, it is observed that in cases the Depository participants had opened the accounts without having a valid proof of identity (POI) and proof of address (POA). 2.7.4       At para 12.11, it is sated that the Pratik  had opened many accounts of the same person with

of personal hearing at the SEBI Head Office, Mumbai within 15 days from the date of the ex-parte order. They were also given an opportunity to inspect the relevant documents relied upon by SEBI against them, prior to hearing. 2.0

Source: SecMarx — sebi:WTM/TCN/08/ISD/05/07. 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.