Order against Good Fortune Advisory Services Pvt. Ltd.( Fortune Equity Brokers (India) Ltd

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM : V.K CHOPRA, WHOLE TIME MEMBER

ORDER

Under regulation 13(4) of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 against Good Fortune Advisory Services Pvt. Ltd. [Fortune Equity Brokers (India) Ltd.], Broker, National Stock Exchange(NSE), for the dealings in the scrip of Nedungadi Bank Ltd.

1. Securities and Exchange Board of India (hereinafter referred to in short as “SEBI”) conducted investigation into the affairs relating to buying, selling and dealing in the shares of Nedungadi Bank Ltd.

2. SEBI, after considering the investigation report, appointed an Enquiry Officer vide Order dated November 11, 2003 to enquire into the violations allegedly committed by the broker Good Fortune Advisory Services Pvt. Ltd., name changed to Fortune Equity Brokers (India) Ltd (hereinafter referred to in short as “the Broker”) under the provisions of Section 12 of Securities and Exchange Board of India Act, 1992, Regulation 4(a), (b) and (c) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 and  clause A(2), (3) and (5) of Code of Conduct prescribed under Regulation 7 read with schedule II of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992.

3. The Enquiry Officer submitted his report dated June 14, 2005. I have perused this report and the other material documents relied upon by him to arrive at a conclusion in the proceedings against the Broker in the matter of Nedungadi Bank Ltd. In the said report, the Enquiry Officer has observed that there is no material evidence to prove that the Broker was involved in or at least aware of the spot transactions. As regards the allegation of acting in concert with other entities and financing transactions, the Enquiry Officer observed that though the transaction might have been a financing transaction, however the Broker’s involvement in the same could not be established from the evidence gathered. In view of lack of evidence, the Enquiry Officer held that the Broker can not be held as being involved in the same.  

4. Taking into consideration the totality of the facts and circumstances of the case and the findings/recommendations of the Enquiry Officer mentioned in the report and the relevant provisions of law governing the case, I have come to the conclusion that this matter is not a fit case to levy any penalty as the charges against the Broker have not been established with reasonably good evidence. Further, viewed from the relevant legal position, I feel that there is no evidence on record to prove that the said Broker failed to exercise due care, skill and diligence in the conduct of its business.

5. Having regard to what has been stated above, I find no reason to differ with the recommendations of the Enquiry Officer. Accordingly, in exercise of the powers conferred upon me in terms of Section 19 of the Securities and Exchange Board of India Act, 1992 read with Regulation 13(4) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, I hereby dispose of the enquiry proceedings as above against the broker Fortune Equity Brokers (India) Ltd.