sebi:WTM/VKC/MIRSD/DPS-1/83/07

SEBI · SEBI · 2004-07-26 · Mr. V.K. Chopra, Whole Time Member

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Facts / Headnote

Restrained M/s. Patni Shares and Derivatives Co., Shri Ujwal Patni and Shri Ashish Patni from buying, selling or dealing in securities in any manner whatsoever for a period of two years, with immediate effect.

Provisions invoked

• s. 11B
• s. 11
• s. 11(4)
• s. 19
• s. 11(1)
• s. 12(1)

Parties

• M/s. Patni Shares and Derivatives Co
• Shri Ashish Patni
• Shri Ujwal Patni

Holding

The noticees, acting as an unregistered sub-broker in the name of M/s. Patni Shares and Derivatives Co., were restrained from buying, selling or dealing in securities for a period of two years for violating Section 12(1) of the SEBI Act, 1992 and Rule 3 of the SEBI (Stock Brokers and Sub-brokers) Rules, 1992.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER [Under Section 11(1), Section 11(4)(b) and Section 11B of the SEBI Act, 1992 against M/s. Patni Shares and Derivatives Co and Shri Ashish Patni and Shri Ujwal Patni] 1.1                        SEBI received a complaint dated 26.07.2004 from Shri Sarju Prasad Mandal (hereinafter referred to as the complainant) stating that h traded in F&O and Cash Segment through M/s. Patni Shares and Derivatives Co. (hereinafter referred to as Patni), a franchise of M/s. A Sindhoori Capital Investment Ltd (hereinafter referred to as ASCIL). He alleged that he had not received the payments, his accounts we settled, not received statement of accounts and covered certain positions without his knowledge. 2.0             Preliminary Findings 2.1 The enquiries made by SEBI prima facie revealed the following:- ·        Patni, a franchise of ASCIL based at Bhilai was managed by Shri Ashish Patni and Shri Ujwal Patni. ·        The complainant traded in both cash and derivatives segment and placed his orders through Patni. ·        Though the complainant was not directly registered as a client of ASCIL, the trades on behalf of the complainant were placed client code of Shri Ujwal Patni, who was a client of ASCIL and with whom ASCIL had entered into a member-client agreeme Shri Ujwal Patni was the brother of Shri Ashish Patni. ·        The complainant was asked to transfer his shares into the BO ID 10158354 which app

4.2 As may be seen from the information and details gathered and enquiries made, Shri Ashish Patni and Shri Uiwal Patni were dealing on behalf complainant. All the orders on behalf of the complainant were placed in the client code of Shri Ujwal Patni. Bills were issued to the complai the name of M/s.Patni Shares and Derivatives Co for his orders. The shares of the complainant were transferred to the DP account of Shr Patni and further, shares were also transferred from the DP account of Shri Ujwal Patni to the DP account of the complainant. 4.3 M/s. Patni Shares and Derivatives Co, Shri Ashish Patni and Shri Uiwal Patni were not registered with SEBI as a sub-broker. As per Section 1 SEBI Act, “No stock broker, sub-broker-------- and such other intermediary who may be associated with securities market shall buy, sell or deal in sec except under and in accordance with the conditions of a certificate of registration obtained from the Board in accordance with the regulations under this Act.” As per Rule 3 of SEBI (Stockbroker and Sub-brokers) Rules, 1992, which was in force at the relevant time, “No stock broker and sub-broker shall buy, sell, deal in securities, unless he holds a certificate granted by the Board under the regulation.” The dealings of Shri Ashish Patni and Shri Uiwal Patni as an unregistered sub- broker in the name of M/s. Patni Shares and Derivatives Co violation of Section 12(1) of SEBI Act, 1992 and Rule 3 of SEBI (SEBI Stock Broker and Sub-broker) Rules,1992

· The complainant was asked to transfer his shares into the BO ID 10158354 which apparently was the BO ID of Shri Ashish Patni’s brother Shri Ujwal Patni. Hence, the trades on behalf of the complainant were placed by Patni through the client code of Shri Ujwal Patni. It was also found that Shri Ujwal Patni was registered as a client of ASCIL. · It was also evident from the examination of the transaction statements of the complainant and Shri Ujwal Patni that shares were also transferred from the BO ID of Shri Ujwal Patni to the demat account of the complainant ( BO ID 11282844 maintained with IDBI Bank Ltd). · Shri Ashish Patni also issued confirmation memos/bills to the complainant in the name of M/s. Patni Shares and Derivatives Co. for his transactions. 2.2 Though the complainant had dealt with an unregistered entity, on receipt of the complaint, SEBI had taken up the matter with ASCIL for an amicable settlement of the grievance. NSE also informed vide letter dated 16.05.2005 to SEBI that they had taken up the grievance with ASCIL for resolving the same administratively. However, on account of conflicting claims and counter claims made by the complainant and the trading member, NSE had advised the complainant to file arbitration case against ASCIL. 3.0 Show cause notice and the submission of M/s.Patni Shares and Derivatives Co and Shri Ashish Patni and Shri Ujwal Patni 3.1 SEBI issued a notice dated 02.03.2006 to Shri Ashish Patni and Shri Ujwal Patni separately calling up

Source: SecMarx — sebi:WTM/VKC/MIRSD/DPS-1/83/07. 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.