sebi:WTM/TCN/50/ID2/08/07

SEBI · SEBI · 2001-02-02 · 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

Minor penalty of warning directed; Argus Stock Broking Ltd. directed to be careful in future and exercise due skill, care and diligence.

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 13(2)
• Reg. 13
• Reg. 5
• Reg. 6(1)

Parties

• Argus Stock Broking Ltd.

Holding

Argus Stock Broking Ltd. was found to have failed to exercise due skill and care in dealing in the scrip of TIL, a company declared a vanishing company, and was directed to be careful in future and exercise due skill, care and diligence as a capital market intermediary.

Full text

2 1.2 Based on the investigation of DSE, SEBI ordered a preliminary enquiry into the trading of the scrip during December 2001. During the course of preliminary enquiry, it was observed that the trading was concentrated amongst a few brokers. Also, some of the trading brokers and the trading clients were suspected to be associated with the company. In view of the above, SEBI conducted detailed investigation into the matter. 1.3 Investigations revealed that TIL was included in the list of vanishing companies based on the following criteria : (i) Company not responding to shareholders for a period of 2 years. (ii) Non-compliance of listing agreement (iii) Company is not available at the registered office 1.4 The price volume data of the scrip of DSE for the period from February 2, 2001 to June 28, 2001 is below : Date Opening Price Closing Price High Price Low Price Traded Quantity 02-02-01 16.00 16.00 16.00 16.00 500 09-02-01 16.50 16.50 16.50 16.50 500 23-02-01 18.00 18.00 18.00 18.00 500 26-02-01 20.20 20.20 20.20 20.20 200 27-02-01 21.80 21.80 21.80 21.80 200 16-03-01 23.50 23.50 23.50 23.50 500 19-03-01 25.25 25.25 25.25 25.25 500 22-03-01 27.25 27.25 27.25 27.25 100 23-03-01 29.40 29.40 29.40 29.40 100 20-04-01 29.40 29.40 29.40 29.40 500 23-04-01 31.70 31.70 31.70 31.70 200 24-04-01 29.20 29.20 29.20 29.20 200 25-04-01 26.90 26.90 26.90 26.90 200 27-04-01 24.75 24.75 24.75 24.75 200 30-04-01 23.00 23.00 23.00 23.00 200

3 Date Opening Price Closing Price High Price Low Price Traded Quantity 03-05-01 21.30 21.30 21.30 21.30 200 23-05-01 23.00 23.00 23.00 23.00 1000 24-05-01 24.80 24.80 24.80 24.80 1000 25-05-01 26.00 26.00 26.00 26.00 1000 28-05-01 26.10 27.90 27.90 26.10 2200 31-05-01 27.90 27.00 27.90 27.00 700 01-06-01 27.25 29.00 29.00 27.25 1000 05-06-01 27.00 26.35 27.00 26.35 1000 06-06-01 25.00 26.00 26.00 25.00 2000 07-06-01 25.50 26.00 26.50 25.50 1000 20-06-01 28.00 28.00 28.00 28.00 1100 21-06-01 30.00 30.00 30.00 30.00 100 22-06-01 31.00 31.00 31.00 31.00 1100 25-06-01 32.00 32.00 32.00 31.00 1500 27-06-01 32.50 32.50 32.50 32.50 500 28-06-01 34.00 34.00 34.00 34.00 500 1.5 During the above period the scrip was traded only for 31 days and the total number of shares traded were only 20,500. The average traded volume per day works out to about 660 shares. In many of the above trading days there were only one or two trades in the scrip. The maximum number of shares traded on any particular dated during the period under scrutiny was only 2200 shares. Thus, there was very little trading interest in the scrip. The price of the scrip has increased from Rs. 16/- on February 2, 2001 to Rs. 34/- on June 28, 2001 signifying a price increase on 113%. The above price increase was accompanied by thin trading volumes. DSE has also informed that none of the above transactions resulted in any net delivery. Also, no off the floor trades were reported to the stock exchanges.

4 1.6 The details of the shares traded by stock brokers in the scrip of TIL during the period from February 2, 2001 to June 30, 2001 as furnished by DSE is below: Sr.No. Member Name Total Purchase Total Sale Gross Net

Source: SecMarx — sebi:WTM/TCN/50/ID2/08/07. 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.