sebi:WTM/TCN/ID3/31/06/2007

SEBI · SEBI · 1999-06-03 · 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 imposed on the noticee; charges under Regulation 4(a) and 4(b) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 1995 not sustained; recommended 4-month suspension not imposed.

Provisions invoked

• s. 19

Regulations

• Reg. 7
• Reg. 13(4)
• Reg. 199
• Reg. 4(a)
• Reg. 13(1)

Parties

• M/s. Triveni Management Consultancy Services Limited

Holding

The noticee broker was found to have contravened SEBI circulars on client agreements and Clause A(1) and (4) of the Code of Conduct under Schedule II of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, but the charge of aiding and abetting price manipulation under Regulation 4(a) and 4(b) of the PFUTP Regulations, 1995 was not sustained. A penalty of censure was imposed instead of the 4-month suspension recommended by the Enquiry Officer.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER REGULATION 13(4) OF THE SEBI (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS,  2002, AGAINST M/s. TRIVENI MANAGEMENT CONSULTANCY SERVICES LIMITED BEARING SEBI REGISTRATION  NO. INB230652831, MEMBER OF THE NATIONAL STOCK EXCHANGE IN THE MATTER OF M/s. SNOWCEM INDIA LIMITED 1.0 BACKGROUND 1.1 The National Stock Exchange (hereinafter referred to as “NSE”) conducted an investigation into the dealings in the scrip of M/s. Snowcem Limited (hereinafter referred to as SIL) for the period June 3, 1999 to August 10, 1999. In their report submitted to the Securities and Exc Board of India (herein after referred to as ‘SEBI’ or ‘the Board’), they had observed that scrip of SIL record-*ed a dramatic increase in the av number of trades and from an average of 3 trades a day during the period March 1, 1999 to May 25, 1999, it went up to as high as 173 tra day during the period June 3, 1999 to August 10, 1999. There was a major spurt in the total volume in the scrip. From an average daily volu 12,521 shares during the period March 1, 1999 to May 25, 1999, it recorded a five-fold increase to record volumes of 68,370 shares a day the investigation period i.e. from June, 1999 to August, 1999. The increasing trend in volumes was accompanied by the price rise in the s well. The scrip price of SIL fluctuated between Rs.48.10 to Rs.55.80 during the period March 1,1999 to

Sourabh Bora was adequately capitalized by way of transfer of funds from SIL. In addition to the above, the records indicated that Shri S Bora still owed more than Rs.6 crores to KIL which in turn owed more than Rs.15 crores to SIL which revealed that Shri Bora had not ma payments to the company towards the forfeited shares allotted to him and the whole matter was just a book entry and the company mana create shares without actual infusion of funds. Subsequently, it was revealed in investigation that KIL and Shri Sourabh Bora indulged in tra the scrip of SIL through various members of BSE and NSE including M/s. Triveni Management Consultancy Services Ltd., a corporate mem NSE. 1.3 M/s. Triveni Management Consultancy Services Ltd. (hereinafter referred to as ‘the noticee’ or ‘the `broker’) is a member of NSE with Registration No. INB230652831. Investigation report revealed discrepancy in the client introduction/registration formalities by the noticee time of inducting M/s. Kosha Investments Limited (KIL) as their client. It was alleged that the trading by KIL in relatively less liquid scrip have alerted the broker and that it has failed to monitor the dealings of KIL. Thus, the broker has violated the provisions of Regulation 4(a), ( (d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 1995 and SEBI (Stock B and Sub-Brokers) Regulations, 1992 and the provisions of code of conduct prescribed for stock brokers containe

volume of 12,521 shares during the period March 1, 1999 to May 25, 1999, it recorded a five-fold increase to record volumes of 68,370 shares a day during the investigation period i.e. from June, 1999 to August, 1999. The increasing trend in volumes was accompanied by the price rise in the scrip as well. The scrip price of SIL fluctuated between Rs.48.10 to Rs.55.80 during the period March 1,1999 to May 25,1999. From June 3,1999, it started rising and touched Rs.127.95 on August 10,1999. From the analysis of the trading details of various members along with their clients, NSE observed that some entities associated / close to the Snowcem Group had been actively involved in trading of its shares during the said period resulting in unusual spurt in prices and traded volumes. It was further observed that in some settlements their contribution was as high as over 90% of the total market activity. 1.2 Pursuant to the above, SEBI conducted investigation into the dealings in the scrip of SIL and observed that Kosha Investments Limited (herein after referred to as KIL) as the predominant trader in the scrip during the aforesaid period of investigations. It was further observed that SIL had reissued forfeited shares which were allotted to one Shri Sourabh Bora who was identified as one of the top clients who had traded in the scrip apart from KIL. The money received by KIL from SIL was time and again utilized for the purpose of making payments to brokers. It was observed that the timing

Source: SecMarx — sebi:WTM/TCN/ID3/31/06/2007. 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.