sebi:WTM/TCN/ID3/100/02/2007

SEBI · SEBI · 2003-10-10 · 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

Censure

Regulations

• Reg. 4
• Reg. 13(4)
• Reg. 13(2)
• Reg. 6(1)

Parties

• M/s. Vishal J Shah and Co. (SEBI Registration No. INB031122618), Member of Calcutta Stock Exchange, represented by its Proprietor Shri Vishal J Shah

Holding

The member was censured for failing to exercise due care and diligence in executing matched cross deals in the scrip of Western Projects Limited and for trading only for brokerage, in contravention of the Code of Conduct under SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992. The recommended 6-month suspension was not imposed, as the trades resulted in actual delivery to and from clients, which was treated as a mitigating factor.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER REGULATION 13(4) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFCER AND IMPOSING

resigned thus not resulting in any hearing by him. Subsequently when the case was referred to me, a notice dated 16-05-2006 was sent to the member requiring it to appea me for a hearing which was scheduled for 15-06-2006. On request from the member the date of hearing was re-scheduled for 17-06-2006. On the said day, the member repr by Shri Haresh R Dave appeared before me and made his submissions. 4.0  ISSUES FOR CONSIDERATION 4.1 I have perused the show cause notices, enquiry report, the replies and the submissions of the member. The issues that arise for consideration in the present case are: i) Whether the member has entered into artificial trades thereby creating a false misleading appearance of trading in the market in the scrip of WPL? ii) Whether the member has violated the relevant provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 Brokers and Sub-Brokers) Regulations, 1992? 4.2 I note that the charge against the member was that, it had executed many cross deals in the scrip of WPL and that in those transactions both the buying and the selling clients b to the member. It is to be mentioned here that the proprietor, Shri Vishal J Shah of the broking concern was also a director of WPL.  The trades were alleged to be in the n matched deals in terms of quantity, time and price and also included proprietary trades between May 07, 2001 and September 17, 2001. It was further alleged that these trades wer

included proprietary trades between May 07, 2001 and September 17, 2001. It was further alleged that these artificial trades were executed to enable one Mr. Ashwin Mehta who on 07-12-2001 proposed to acquire 17.5% of the shares of WPL at Rs. 3/- per share and filed an application with the Securities and Exchange Board of India (herein after referred to as ’SEBI’) for exemption from making a public announcement under SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (herein after referred to as ‘SAST Regulations’) which had been rejected. It was alleged that the above said artificial trades were undertaken by the member, also a director of WPL with the objective of making the said scrip to be classified as ‘frequently traded shares’ as prescribed by the SAST Regulations so as to reduce the financial liability of the acquirer to enable him to acquire the shares at Rs. 3/- per share instead of the book value of the share which was at Rs. 58/-. In view of the said violations, it was felt that an enquiry was necessary to look into the same. 2.0 SHOW CAUSE NOTICE AND ITS REPLY 2.1 In order to enquire into the allegations leveled against the member, an Enquiry Officer was appointed by SEBI by an order dated 10-10-2003. A show cause notice dated 27-02-2004 as prescribed under Regulation 6(1) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 was issued to the member informing it about the charges with respect to its

Source: SecMarx — sebi:WTM/TCN/ID3/100/02/2007. 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.