sebi:WTM/TCN/ID7/115/JAN//2009
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Penalty imposed: suspension of certificate of registration of M/s. Sree Ganesh Enterprise for a period of one month, effective after 21 days from the date of the order.
Provisions invoked
- s. 19
Regulations
- Reg. 3
- Reg. 13
- Reg. 15
- Reg. 28
Parties
- M/s. Sree Ganesh Enterprise (SGE)
Holding
The Whole Time Member found SGE guilty of violating Regulation 3 of the PFUTP Regulations and clauses B(4)(b) and D(4) of the Code of Conduct for sub-brokers under Schedule II read with Regulation 15 of the Broker Regulations, and imposed a penalty of suspension of SGE's certificate of registration for one month.
Full text
Page 2 of 20 2. On receipt of the investigation report from the BSE, the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted investigations into the dealings in the scrip for the period between 01-01- 2001 and 31-03-2001. The investigations revealed that on 16.03.2001 when a total 4,43,300 shares were traded, Shyam Investments, Uttam Investments, Loko Securities, Rupani Enterprises and Jatin J. Shah were the sellers while Comet Investments Pvt. Ltd., Addvalue Financial Services Pvt. Ltd., Meeta A. Gala, Mitesh V. Shah, Dharmen J. Sheth, Rohit Gandhi, Caplon Securities & Investments Pvt. Ltd. were the buyers. It was revealed that prior to 16.03.2001, none of these selling clients were holding any shares of Alang. It was further revealed that few ultimate clients of the selling members had common address. The selling clients sold mostly through Bang Equity Broking Pvt. Ltd., Sovereign Securities Pvt. Ltd., Kaushik Shah Share and Securities Ltd. and Shri Kirtikumar Fulchand Vora, whereas most of the buy orders were placed through the broker, M/s. Century Consultants Ltd. (hereinafter referred to as “CCL”).
Page 3 of 20 them to trade in the scrip. On the basis of the above findings in the Investigation Report, it was alleged that SGE had violated the provisions of Regulation 3 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (hereinafter referred to as “PFUTP Regulations”) and Clauses D(4) and B(4)(b) of the Code of Conduct prescribed for sub- brokers mentioned under Schedule II read with regulation 15 of the SEBI(Stockbrokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as ‘broker regulations’).
Page 4 of 20 a) With regard to transfer of 3, 00, 000 shares in the demat account of partners of SGE, SGE submitted that the objective of selling the same on BOLT was to enable the selling group to sell the shares in accordance with law and enable its clients who purchased these shares, to get it free from issues involved in the preceding ownership. Such large quantity of shares is best sold through transparent system of BOLT. As good faith for the sellers and buyers for effective and expeditious transfer of shares, these shares might have been transferred into the account of a partner of SGE.
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Source: SecMarx — sebi:WTM/TCN/ID7/115/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.