sebi:WTM(TCN)/81/ID4/08
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Facts / Headnote
Suspension of certificate of registration of CML having SEBI Registration No. INB230769433 for a period of one month, effective on expiry of 21 days from date of order.
Provisions invoked
- s. 19
- s. 12
Regulations
- Reg. 7
- Reg. 4
- Reg. 4(a)
- Reg. 28(2)
Parties
- C Mackertich Ltd.
Holding
CML violated Regulation 4(a) of SEBI (PFUTP) Regulations, 1995, Section 12 of SEBI Act read with Rule 3 of Stock-Brokers and Sub-Brokers Rules and related conduct norms, and its certificate of registration was suspended for one month.
Full text
Page 2 of 15 2. The scrip of SEAMECL was traded on the Bombay Stock Exchange Ltd. (BSE), National Stock Exchange (NSE) and Calcutta Stock Exchange (CSE). The price volume data of the scrip at the aforesaid three exchanges during the investigation period shows that the price of the scrip moved from Rs.15 to Rs.389 within a short period of about 8 months. The total traded quantity during the relevant period at these exchanges was 5,24,52,600 shares.
Page 3 of 15 price than the last traded price of the scrip. CML was thus alleged to have created artificial volume and influenced the price of the scrip of SEAMECL thereby violating Regulations 4 (a), (b), (c) and (d) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995. Further, it had allegedly failed to exercise due diligence in the trades conducted on behalf of its group companies and allowed those entities to create artificial volumes by buying and selling without transferring any beneficial ownership and thus violated provisions of Regulation 7 read with Schedule II of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992. 5. From the trading details provided by CML and CSFB (India) Securities Pvt. Ltd. (hereinafter referred to as “CSFB”), a stock broker having membership of NSE and BSE, it was also found that CML had traded at BSE and NSE through CSFB (India) Securities Pvt. Ltd. in spite of having its membership at both the exchanges during that period. It was therefore alleged that CML by acting as a sub-broker to CSFB without signing any agreement violated the SEBI (Stock-Brokers and Sub-Brokers) Rules and Regulations, 1992 and SEBI Circular No.SMD/Policy/Cir/98 dated January 16, 1998 by trading with the other members of the same exchange i.e CSFB.
Page 4 of 15 7. The EO after conducting the Enquiry in terms of the Enquiry Regulations found that CML had influenced the price of the scrip of SEAMECL and therefore violated Regulation 4(a) of SEBI (PFUTP) Regulations, 1995. The EO also found that CML had also violated the provisions of Section 12 of SEBI Act read with Rule 3 of SEBI (Stock Broker and Sub Broker) Rules, 1992 and also SEBI Circular no. SMD/Policy/Cir/98 dated January 16, 1998 by not entering any agreement while dealing with CSFB without registration with SEBI. The EO in his report recommended the suspension of the certificate of registration of CML for a period of three months.
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Source: SecMarx — sebi:WTM(TCN)/81/ID4/08. 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.