sebi:WTM/TCN/166/ID3/JAN/2009

SEBI · SEBI · 1996-03-14 · Dr. T.C. Nair, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Show cause notice against Share Plaza disposed of with a warning; no penalty imposed despite Enquiry Officer's recommendation of 4-month suspension.

Provisions invoked

• s. 19
• s. 12(1)
• s. 12

Regulations

• Reg. 4
• Reg. 13
• Reg. 4(a)
• Reg. 15
• Reg. 28(2)

Parties

• Share Plaza

Holding

The Whole Time Member found Share Plaza guilty of executing synchronised trades in the scrip of EIL through NAM and Sanchit, creating artificial and illusory volumes in violation of Regulation 4(c) and (d) of the PFUTP Regulations, 1995, but declined to impose the recommended suspension of its sub-broker registration, instead warning Share Plaza to exercise due skill, care and diligence in future.

Full text

2 April 2000 to August 2000 (“period II”) [both the periods hereinafter referred to as “the relevant period”] into the buying/selling/dealing in the scrip of EIL. Investigation revealed that trading in the scrip of EIL was not very active at both BSE and NSE during the relevant period. It was found that only 200 shares at BSE and 1,800 shares at NSE were traded during the period January 1998 to August 1999. During September 1999 to March 2000, 6,500 shares and 3,04,200 shares were traded at BSE and NSE respectively. Further during September 2000 and March 2001, the trading at BSE was nil whereas 26,295 shares were traded at NSE.

3 continuous basis from group or associate companies of EIL to the accounts of brokers/sub-brokers etc. 1.5 It was alleged that Share Plaza, a sub-broker to Nam Securities Limited (hereinafter referred to as “NAM”) was a major client who had contributed to substantial volumes during the relevant period. Share Plaza traded for 7,500 shares of EIL and was a common client between NAM and Sanchit Financial and Management Services Ltd (hereinafter referred to as “Sanchit”), member, NSE on both buy and sell side. It was further alleged that Share Plaza had traded as an unregistered sub broker of Sanchit in violation of Section 12(1) of SEBI Act, 1992 and read with Rule 3 of SEBI (Stock Brokers and Sub Brokers) Rules (hereinafter referred to as “the Rules”) and SEBI Circulars SMD/OPG/AA/1020/96 dated March 14, 1996 and SMD/POLICY/CIR-11/97 dated May 21, 1997. The transactions done by Share Plaza through NAM and Sanchit were alleged to be irregular thereby violating Regulation 4(a), (b) and (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 (hereinafter referred to as “PFUTP Regulations”) and provisions of Clause A (1) and (2) of the Code of Conduct for sub brokers laid down in Regulation 15 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992.

4 referred to as “Enquiry Regulations”) and found that by entering into synchronised transactions, where the buying and selling client was Share Plaza, it had created artificial volumes in the market in violation of Regulation 4 (c) and (d) of the PFUTP Regulations. The Enquiry Officer found that Share Plaza dealt as an unregistered sub broker to Sanchit while dealing for its ultimate clients and thus violated the provisions of Section 12 of the SEBI Act read with the Stock Broker Rules and aforesaid SEBI circulars dated March 14, 1996 and May 21, 1997. The Enquiry Officer submitted his report dated November 3, 2003 recommending a

Source: SecMarx — sebi:WTM/TCN/166/ID3/JAN/2009. 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.