sebi:WTM/TCN/ERO/94/JAN/2009
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Facts / Headnote
Censure imposed on the noticee broker; enquiry officer's recommended 6-month suspension not imposed.
Provisions invoked
- s. 19
Regulations
- Reg. 7
- Reg. 6
- Reg. 4
- Reg. 13
- Reg. 5
- Reg. 28
Parties
- M/s. Swadha Securities Pvt. Ltd.
Holding
The Whole Time Member found that Swadha Securities Pvt. Ltd. contravened clauses (a) and (b) of Regulation 4 of the PFUTP Regulations and Regulation 7 read with sub-clauses (1), (2) and (4) of Schedule II of the Broker Regulations (and, in the Akshay matter, SEBI Circular SMDRP/POLICY/CIR-32/99) by executing cross deals in the scrips of Akshay, Ashika and Sharadraj, and imposed a penalty of censure instead of the 6-month suspension recommended by the Enquiry Officer.
Full text
Page 2 of 12 The Securities and Exchange Board of India (‘SEBI’ for short) had conducted investigations into the alleged excessive speculative transactions in some of the finance/investment, bio-tech and info-tech companies which were listed at the Calcutta Stock Exchange (hereinafter referred to as “CSE”). Akshay Fiscal Services Ltd. (Akshay), Ashika Credit Capital Ltd. (Ashika) and Sharadraj Trade Finance Ltd. were three such companies where widespread speculative trading was reported to SEBI by the CSE. In view of the above, trading in the shares of the said companies were subjected to investigations by the SEBI for the period July to October, 2001 (hereinafter also referred to as ‘the investigation period’) to find any possible violations of the provisions of the SEBI Act, 1992 and the rules and regulations framed thereunder. The investigations revealed that M/s. Swadha Securities Pvt. Ltd. (hereinafter referred to as ‘noticee’ or ‘broker’), a member of the CSE and registered with the SEBI (SEBI Registration No. INB031141238) had dealt in the shares of the above said companies allegedly in a manner contravening the provisions of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (‘PFUTP Regulations’) and the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (‘Broker Regulations’).
Page 3 of 12 respective show cause notice issued to the noticee. The noticee had submitted its reply vide letters dated 25-10-2004 in the matters of Akshay and Ashika to the Enquiry Officer. Vide letter dated 27-10-2004, the noticee replied to the show cause notice issued in the matter of Sharadraj. After completing the enquiry in terms of the Enquiry Regulations, the Enquiry Officer in his Report to the Board found that the noticee violated the provisions of Regulation 7 of the Broker Regulations read with Clauses A (1), (2), (3) & (5) and B (4) (a) of the Code of Conduct prescribed for stock brokers mentioned under Schedule II of the said regulations, clauses (a), (b), (c) and (d) of Regulation 4 of the PFUTP Regulations and SEBI Circular No. SMDRP/POLICY/CIR – 32/99 dated 14-09-1999 while dealing in the scrip of Akshay. The enquiry officer also found that the noticee of having violated Regulation 7 of the Broker Regulations read with Clauses A (1), (2), (3) & (5) and B (4) (a) of the Code of Conduct prescribed for stock brokers mentioned under Schedule II of the said regulations and also the provisions of clauses (a), (b), (c) and (d) of Regulation 4 of the PFUTP Regulations while dealing in the scrips of Ashika and Sharadraj. Vide separate Enquiry Reports (all dated 19-12-2006), the Enquiry Officer had recommended that the certificate of registration of the noticee be suspended for a period of 6 months in each of the three matters.
Page 4 of 12 Dinesh Kumar Modi & Co were traded substantially in the scrip. The details (per table below) with respect to select brokers in the said scrip from Settlement No. 2002115 to 2002129 would indicate that the noticee has contributed 24% on the total buy and 37% of total sell of shares of Akshay at the exchange.
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Source: SecMarx — sebi:WTM/TCN/ERO/94/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.