WTM/GA/3/ERO/4/07
BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA
CORAM: G. ANANTHARAMAN, 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 M/S. S.B. BHUTRA & CO., MEMBER, CALCUTTA STOCK EXCHANGE ASSOCIATION LIMITED IN RESPECT OF ITS DEALINGS IN THE SHARES OF GLOBE STOCKS & SECURITIES LIMITED.
Date of Hearing: February 19, 2007
Appearances:
For Noticee : Shri S.B. Bhutra, Proprietor of the Broker
For Securities and Exchange Board of India: Shri Jayanta Jash, Dy. General Manager
1.0 BACKGROUND:
1.1 It was noticed that the price of the shares of Globe Stocks & Securities Ltd. (hereinafter referred to as the company) increased from Rs. 3.70 during July 2-6, 2001 to Rs. 28.80 during October 8-12, 2001 at Calcutta Stock Exchange Association Limited (hereinafter referred to as CSE), one of the stock exchanges where the shares of the company were listed.
1.2 In view of the aforesaid unusual price movement noticed in the shares of the company, Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted an investigation in respect of buying, selling and dealing in the shares of the company and to inquire into whether the said company, other intermediaries/ persons associated with the said buying, selling and dealing in the shares of the company contravened the provisions of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (hereinafter referred to as the FUTP Regulations), Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations), Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations,1997, (hereinafter referred to as the ‘Takeover Regulations’) and Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as the Insider Trading Regulations).
1.3 The investigation conducted by SEBI found that certain members of CSE namely, Shri. Ballab Dass Daga, Deepak Jhunjhunwala & Co, PDC Securities Pvt. Ltd., N. M. Lohia & Co. and S.B. Bhutra & Co. traded substantially in the shares of the company and contributed 80% of the total turnover in the said shares at CSE during the period July 2, 2001 to October 12, 2001. The aforesaid members of CSE are also registered as stock broker with SEBI. The aforementioned S.B. Bhutra & Co. is hereinafter referred to as the Broker.
1.4 It was found that the Broker had executed trades for 6,55,550 (both buy and sale) shares of the company on behalf of its various clients out of the total turnover 64,86,302 shares at CSE. Investigation revealed that trades for 5,90,000 shares were executed by way of cross deals wherein both the buy and sell orders were executed by the Broker in its single terminal at the same time with the same price and quantity with most of the trades being client to client transactions.
1.5 Transaction details of the Broker in the shares of the company are as follows:
|
Settlement No.
|
Date of transaction
|
Purchase Qty
|
Sale Qty
|
|
2002115
|
2/7/2001
|
2500
|
2500
|
|
2002116
|
11/7/2001
|
10000
|
10000
|
|
12/7/2001
|
63500
|
63500
|
|
13/7/2001
|
57500
|
57500
|
|
2002117
|
19/7/2001
|
57800
|
57800
|
|
20/7/2001
|
9800
|
9800
|
|
2002118
|
26/7/2001
|
10000
|
10000
|
|
2002119
|
30/7/2001
|
21000
|
21000
|
|
2002120
|
6/8/2001
|
16000
|
16000
|
|
2002121
|
14/8/2001
|
5200
|
5200
|
|
17/8/2001
|
30000
|
30000
|
|
2002122
|
20/8/2001
|
100
|
0
|
|
21/8/2001
|
1600
|
1600
|
|
22/8/2001
|
0
|
100
|
|
2002123
|
27/8/2001
|
9000
|
9000
|
|
28/8/2001
|
8500
|
8600
|
|
29/8/2001
|
10050
|
10000
|
|
30/8/2001
|
10000
|
10000
|
|
31/8/2001
|
5000
|
5000
|
|
2002125
|
14/9/2001
|
100
|
0
|
|
2002126
|
19/9/2001
|
300
|
0
|
|
|
|
327950
|
327600
|
1.6 Details of the cross deals executed by the Broker in the shares of company are as follows:
|
Trade No.
|
Trade Date
|
Trade Time
|
Order No.
|
Order Date
|
Order Time
|
Qty.
|
Price (Rs)
|
B/S
|
|
1091
|
02-Jul-01
|
2:43:57 PM
|
511602757
|
02-Jul-01
|
2:43:51 PM
|
2500
|
3.70
|
B
|
|
1091
|
02-Jul-01
|
2:43:57 PM
|
511602762
|
02-Jul-01
|
2:43:57 PM
|
2500
|
3.70
|
S
|
|
1153
|
11-Jul-01
|
10:39:07 AM
|
630805362
|
11-Jul-01
|
10:39:06 AM
|
2500
|
3.50
|
S
|
|
1153
|
11-Jul-01
|
10:39:07 AM
|
630805359
|
11-Jul-01
|
10:39:00 AM
|
2500
|
3.50
|
B
|
|
1154
|
11-Jul-01
|
10:39:07 AM
|
630805359
|
11-Jul-01
|
10:39:00 AM
|
2500
|
3.50
|
B
|
|
1154
|
11-Jul-01
|
10:39:07 AM
|
630805362
|
11-Jul-01
|
10:39:06 AM
|
2500
|
3.50
|
S
|
|
1155
|
11-Jul-01
|
10:39:07 AM
|
630805359
|
11-Jul-01
|
10:39:00 AM
|
2500
|
3.50
|
B
|
|
1155
|
11-Jul-01
|
10:39:07 AM
|
630805362
|
11-Jul-01
|
10:39:06 AM
|
2500
|
3.50
|
S
|
|
1156
|
11-Jul-01
|
10:39:07 AM
|
630805362
|
11-Jul-01
|
10:39:06 AM
|
2500
|
3.50
|
S
|
|
1156
|
11-Jul-01
|
10:39:07 AM
|
630805359
|
11-Jul-01
|
10:39:00 AM
|
2500
|
3.50
|
B
|
|
1208
|
12-Jul-01
|
10:27:15 AM
|
541505003
|
12-Jul-01
|
10:24:00 AM
|
5000
|
3.20
|
B
|
|
1208
|
12-Jul-01
|
10:27:15 AM
|
541505048
|
12-Jul-01
|
10:27:15 AM
|
5000
|
3.20
|
S
|
|
1209
|
12-Jul-01
|
10:27:22 AM
|
541505006
|
12-Jul-01
|
10:24:06 AM
|
5000
|
3.20
|
B
|
|
1209
|
12-Jul-01
|
10:27:22 AM
|
541505049
|
12-Jul-01
|
10:27:22 AM
|
5000
|
3.20
|
S
|
|
1210
|
12-Jul-01
|
10:27:27 AM
|
541505051
|
12-Jul-01
|
10:27:27 AM
|
5000
|
3.20
|
S
|
|
1210
|
12-Jul-01
|
10:27:27 AM
|
541505009
|
12-Jul-01
|
10:24:17 AM
|
5000
|
3.20
|
B
|
|
1211
|
12-Jul-01
|
10:27:31 AM
|
541505046
|
12-Jul-01
|
10:26:59 AM
|
5000
|
3.20
|
B
|
|
1211
|
12-Jul-01
|
10:27:31 AM
|
541505054
|
12-Jul-01
|
10:27:31 AM
|
5000
|
3.20
|
S
|
|
1212
|
12-Jul-01
|
10:28:13 AM
|
541505047
|
12-Jul-01
|
10:27:06 AM
|
5000
|
3.20
|
B
|
|
1212
|
12-Jul-01
|
10:28:13 AM
|
541505062
|
12-Jul-01
|
10:28:13 AM
|
5000
|
3.20
|
S
|
|
1213
|
12-Jul-01
|
1:53:55 PM
|
541507591
|
12-Jul-01
|
1:53:55 PM
|
2000
|
3.20
|
S
|
|
1213
|
12-Jul-01
|
1:53:55 PM
|
541507590
|
12-Jul-01
|
1:53:35 PM
|
2000
|
3.20
|
B
|
|
1214
|
12-Jul-01
|
1:53:55 PM
|
541507590
|
12-Jul-01
|
1:53:35 PM
|
2000
|
3.20
|
B
|
|
1214
|
12-Jul-01
|
1:53:55 PM
|
541507591
|
12-Jul-01
|
1:53:55 PM
|
2000
|
3.20
|
S
|
|
1215
|
12-Jul-01
|
1:53:55 PM
|
541507590
|
12-Jul-01
|
1:53:35 PM
|
2000
|
3.20
|
B
|
|
1215
|
12-Jul-01
|
1:53:55 PM
|
541507591
|
12-Jul-01
|
1:53:55 PM
|
2000
|
3.20
|
S
|
|
1216
|
12-Jul-01
|
1:53:55 PM
|
541507591
|
12-Jul-01
|
1:53:55 PM
|
2000
|
3.20
|
S
|
|
1216
|
12-Jul-01
|
1:53:55 PM
|
541507590
|
12-Jul-01
|
1:53:35 PM
|
2000
|
3.20
|
B
|
|
1217
|
12-Jul-01
|
1:53:55 PM
|
541507590
|
12-Jul-01
|
1:53:35 PM
|
2000
|
3.20
|
B
|
|
1217
|
12-Jul-01
|
1:53:55 PM
|
541507591
|
12-Jul-01
|
1:53:55 PM
|
2000
|
3.20
|
S
|
|
1218
|
12-Jul-01
|
1:54:23 PM
|
541507595
|
12-Jul-01
|
1:54:17 PM
|
2500
|
3.20
|
B
|
|
1218
|
12-Jul-01
|
1:54:23 PM
|
541507596
|
12-Jul-01
|
1:54:22 PM
|
2500
|
3.20
|
S
|
|
1219
|
12-Jul-01
|
1:54:23 PM
|
541507596
|
12-Jul-01
|
1:54:22 PM
|
2500
|
3.20
|
S
|
|
1219
|
12-Jul-01
|
1:54:23 PM
|
541507595
|
12-Jul-01
|
1:54:17 PM
|
2500
|
3.20
|
B
|
|
1220
|
12-Jul-01
|
1:54:23 PM
|
541507595
|
12-Jul-01
|
1:54:17 PM
|
2500
|
3.20
|
B
|
|
1220
|
12-Jul-01
|
1:54:23 PM
|
541507596
|
12-Jul-01
|
1:54:22 PM
|
2500
|
3.20
|
S
|
|
1221
|
12-Jul-01
|
1:54:23 PM
|
541507595
|
12-Jul-01
|
1:54:17 PM
|
1000
|
3.20
|
B
|
|
1221
|
12-Jul-01
|
1:54:23 PM
|
541507596
|
12-Jul-01
|
1:54:22 PM
|
1000
|
3.20
|
S
|
|
1222
|
12-Jul-01
|
1:54:43 PM
|
541507600
|
12-Jul-01
|
1:54:42 PM
|
2500
|
3.20
|
S
|
|
1222
|
12-Jul-01
|
1:54:43 PM
|
541507598
|
12-Jul-01
|
1:54:36 PM
|
2500
|
3.20
|
B
|
|
1223
|
12-Jul-01
|
1:54:43 PM
|
541507598
|
12-Jul-01
|
1:54:36 PM
|
2500
|
3.20
|
B
|
|
1223
|
12-Jul-01
|
1:54:43 PM
|
541507600
|
12-Jul-01
|
1:54:42 PM
|
2500
|
3.20
|
S
|
|
1224
|
12-Jul-01
|
1:54:43 PM
|
541507598
|
12-Jul-01
|
1:54:36 PM
|
2500
|
3.20
|
B
|
|
1224
|
12-Jul-01
|
1:54:43 PM
|
541507600
|
12-Jul-01
|
1:54:42 PM
|
2500
|
3.20
|
S
|
|
1225
|
12-Jul-01
|
1:54:43 PM
|
541507600
|
12-Jul-01
|
1:54:42 PM
|
2500
|
3.20
|
S
|
|
1225
|
12-Jul-01
|
1:54:43 PM
|
541507598
|
12-Jul-01
|
1:54:36 PM
|
2500
|
3.20
|
B
|
|
1226
|
12-Jul-01
|
1:55:01 PM
|
541507602
|
12-Jul-01
|
1:54:57 PM
|
5000
|
3.20
|
B
|
|
1226
|
12-Jul-01
|
1:55:01 PM
|
541507603
|
12-Jul-01
|
1:55:01 PM
|
5000
|
3.20
|
S
|
|
1227
|
12-Jul-01
|
1:55:01 PM
|
541507602
|
12-Jul-01
|
1:54:57 PM
|
5000
|
3.20
|
B
|
|
1227
|
12-Jul-01
|
1:55:01 PM
|
541507603
|
12-Jul-01
|
1:55:01 PM
|
5000
|
3.20
|
S
|
|
1228
|
13-Jul-01
|
2:06:23 PM
|
541512563
|
13-Jul-01
|
2:06:17 PM
|
2000
|
3.10
|
B
|
|
1228
|
13-Jul-01
|
2:06:23 PM
|
541512565
|
13-Jul-01
|
2:06:23 PM
|
2000
|
3.10
|
S
|
|
1229
|
13-Jul-01
|
2:06:23 PM
|
541512563
|
13-Jul-01
|
2:06:17 PM
|
2000
|
3.10
|
B
|
|
1229
|
13-Jul-01
|
2:06:23 PM
|
541512565
|
13-Jul-01
|
2:06:23 PM
|
2000
|
3.10
|
S
|
|
1230
|
13-Jul-01
|
2:06:23 PM
|
541512565
|
13-Jul-01
|
2:06:23 PM
|
2000
|
3.10
|
S
|
|
1230
|
13-Jul-01
|
2:06:23 PM
|
541512563
|
13-Jul-01
|
2:06:17 PM
|
2000
|
3.10
|
B
|
|
1231
|
13-Jul-01
|
2:06:23 PM
|
541512563
|
13-Jul-01
|
2:06:17 PM
|
2000
|
3.10
|
B
|
|
1231
|
13-Jul-01
|
2:06:23 PM
|
541512565
|
13-Jul-01
|
2:06:23 PM
|
2000
|
3.10
|
S
|
|
1232
|
13-Jul-01
|
2:06:23 PM
|
541512563
|
13-Jul-01
|
2:06:17 PM
|
2000
|
3.10
|
B
|
|
1232
|
13-Jul-01
|
2:06:23 PM
|
541512565
|
13-Jul-01
|
2:06:23 PM
|
2000
|
3.10
|
S
|
|
1233
|
13-Jul-01
|
2:06:43 PM
|
541512573
|
13-Jul-01
|
2:06:43 PM
|
2500
|
3.10
|
S
|
|
1233
|
13-Jul-01
|
2:06:43 PM
|
541512570
|
13-Jul-01
|
2:06:38 PM
|
2500
|
3.10
|
B
|
|
1234
|
13-Jul-01
|
2:06:43 PM
|
541512570
|
13-Jul-01
|
2:06:38 PM
|
2500
|
3.10
|
B
|
|
1234
|
13-Jul-01
|
2:06:43 PM
|
541512573
|
13-Jul-01
|
2:06:43 PM
|
2500
|
3.10
|
S
|
|
1235
|
13-Jul-01
|
2:06:43 PM
|
541512570
|
13-Jul-01
|
2:06:38 PM
|
2500
|
3.10
|
B
|
|
1235
|
13-Jul-01
|
2:06:43 PM
|
541512573
|
13-Jul-01
|
2:06:43 PM
|
2500
|
3.10
|
S
|
|
1236
|
13-Jul-01
|
2:06:43 PM
|
541512573
|
13-Jul-01
|
2:06:43 PM
|
2500
|
3.10
|
S
|
|
1236
|
13-Jul-01
|
2:06:43 PM
|
541512570
|
13-Jul-01
|
2:06:38 PM
|
2500
|
3.10
|
B
|
|
1237
|
13-Jul-01
|
2:07:02 PM
|
541512578
|
13-Jul-01
|
2:06:56 PM
|
2000
|
3.10
|
B
|
|
1237
|
13-Jul-01
|
2:07:02 PM
|
541512580
|
13-Jul-01
|
2:07:02 PM
|
2000
|
3.10
|
S
|
|
1238
|
13-Jul-01
|
2:07:02 PM
|
541512578
|
13-Jul-01
|
2:06:56 PM
|
2000
|
3.10
|
B
|
|
1238
|
13-Jul-01
|
2:07:02 PM
|
541512580
|
13-Jul-01
|
2:07:02 PM
|
2000
|
3.10
|
S
|
|
1239
|
13-Jul-01
|
2:07:02 PM
|
541512580
|
13-Jul-01
|
2:07:02 PM
|
2000
|
3.10
|
S
|
|
1239
|
13-Jul-01
|
2:07:02 PM
|
541512578
|
13-Jul-01
|
2:06:56 PM
|
2000
|
3.10
|
B
|
|
1240
|
13-Jul-01
|
2:07:02 PM
|
541512578
|
13-Jul-01
|
2:06:56 PM
|
2000
|
3.10
|
B
|
|
1240
|
13-Jul-01
|
2:07:02 PM
|
541512580
|
13-Jul-01
|
2:07:02 PM
|
2000
|
3.10
|
S
|
|
1241
|
13-Jul-01
|
2:07:02 PM
|
541512578
|
13-Jul-01
|
2:06:56 PM
|
500
|
3.10
|
B
|
|
1241
|
13-Jul-01
|
2:07:02 PM
|
541512580
|
13-Jul-01
|
2:07:02 PM
|
500
|
3.10
|
S
|
|
1242
|
13-Jul-01
|
2:09:05 PM
|
541512602
|
13-Jul-01
|
2:09:04 PM
|
5000
|
3.10
|
S
|
|
1242
|
13-Jul-01
|
2:09:05 PM
|
541512597
|
13-Jul-01
|
2:08:50 PM
|
5000
|
3.10
|
B
|
|
1243
|
13-Jul-01
|
2:09:05 PM
|
541512601
|
13-Jul-01
|
2:09:00 PM
|
5000
|
3.10
|
B
|
|
1243
|
13-Jul-01
|
2:09:05 PM
|
541512602
|
13-Jul-01
|
2:09:04 PM
|
5000
|
3.10
|
S
|
|
1244
|
13-Jul-01
|
2:09:08 PM
|
541512597
|
13-Jul-01
|
2:08:50 PM
|
5000
|
3.10
|
B
|
|
1244
|
13-Jul-01
|
2:09:08 PM
|
541512604
|
13-Jul-01
|
2:09:08 PM
|
5000
|
3.10
|
S
|
|
1245
|
13-Jul-01
|
2:09:08 PM
|
541512604
|
13-Jul-01
|
2:09:08 PM
|
5000
|
3.10
|
S
|
|
1245
|
13-Jul-01
|
2:09:08 PM
|
541512601
|
13-Jul-01
|
2:09:00 PM
|
5000
|
3.10
|
B
|
|
1246
|
13-Jul-01
|
2:09:21 PM
|
541512605
|
13-Jul-01
|
2:09:15 PM
|
9000
|
3.10
|
B
|
|
1246
|
13-Jul-01
|
2:09:21 PM
|
541512606
|
13-Jul-01
|
2:09:21 PM
|
9000
|
3.10
|
S
|
|
1322
|
19-Jul-01
|
2:34:44 PM
|
451454362
|
19-Jul-01
|
2:34:18 PM
|
5000
|
3.10
|
B
|
|
1322
|
19-Jul-01
|
2:34:44 PM
|
451454368
|
19-Jul-01
|
2:34:44 PM
|
5000
|
3.10
|
S
|
|
1323
|
19-Jul-01
|
2:34:48 PM
|
451454369
|
19-Jul-01
|
2:34:48 PM
|
10000
|
3.10
|
S
|
|
1323
|
19-Jul-01
|
2:34:48 PM
|
451454364
|
19-Jul-01
|
2:34:25 PM
|
10000
|
3.10
|
B
|
|
1324
|
19-Jul-01
|
2:34:53 PM
|
451454366
|
19-Jul-01
|
2:34:31 PM
|
5000
|
3.10
|
B
|
|
1324
|
19-Jul-01
|
2:34:53 PM
|
451454373
|
19-Jul-01
|
2:34:52 PM
|
5000
|
3.10
|
S
|
|
1325
|
19-Jul-01
|
2:35:19 PM
|
451454378
|
19-Jul-01
|
2:35:04 PM
|
10000
|
3.10
|
B
|
|
1325
|
19-Jul-01
|
2:35:19 PM
|
451454387
|
19-Jul-01
|
2:35:18 PM
|
10000
|
3.10
|
S
|
|
1326
|
19-Jul-01
|
2:35:22 PM
|
451454390
|
19-Jul-01
|
2:35:22 PM
|
10000
|
3.10
|
S
|
|
1326
|
19-Jul-01
|
2:35:22 PM
|
451454382
|
19-Jul-01
|
2:35:09 PM
|
10000
|
3.10
|
B
|
|
1327
|
19-Jul-01
|
2:35:28 PM
|
451454385
|
19-Jul-01
|
2:35:14 PM
|
5000
|
3.10
|
B
|
|
1327
|
19-Jul-01
|
2:35:28 PM
|
451454391
|
19-Jul-01
|
2:35:28 PM
|
5000
|
3.10
|
S
|
|
1328
|
19-Jul-01
|
2:36:04 PM
|
451454395
|
19-Jul-01
|
2:35:49 PM
|
5000
|
3.20
|
B
|
|
1328
|
19-Jul-01
|
2:36:04 PM
|
451454398
|
19-Jul-01
|
2:36:04 PM
|
5000
|
3.20
|
S
|
|
1329
|
19-Jul-01
|
2:36:07 PM
|
451454399
|
19-Jul-01
|
2:36:07 PM
|
5000
|
3.20
|
S
|
|
1329
|
19-Jul-01
|
2:36:07 PM
|
451454396
|
19-Jul-01
|
2:35:53 PM
|
5000
|
3.20
|
B
|
|
1330
|
19-Jul-01
|
2:36:13 PM
|
451454397
|
19-Jul-01
|
2:35:59 PM
|
2800
|
3.20
|
B
|
|
1330
|
19-Jul-01
|
2:36:13 PM
|
451454402
|
19-Jul-01
|
2:36:12 PM
|
2800
|
3.20
|
S
|
|
1333
|
20-Jul-01
|
2:39:26 PM
|
541531714
|
20-Jul-01
|
2:39:11 PM
|
5000
|
3.20
|
B
|
|
1333
|
20-Jul-01
|
2:39:26 PM
|
541531719
|
20-Jul-01
|
2:39:26 PM
|
5000
|
3.20
|
S
|
|
1334
|
20-Jul-01
|
2:39:30 PM
|
541531714
|
20-Jul-01
|
2:39:11 PM
|
500
|
3.20
|
B
|
|
1334
|
20-Jul-01
|
2:39:30 PM
|
541531720
|
20-Jul-01
|
2:39:30 PM
|
500
|
3.20
|
S
|
|
1335
|
20-Jul-01
|
2:39:30 PM
|
541531720
|
20-Jul-01
|
2:39:30 PM
|
2500
|
3.20
|
S
|
|
1335
|
20-Jul-01
|
2:39:30 PM
|
541531715
|
20-Jul-01
|
2:39:17 PM
|
2500
|
3.20
|
B
|
|
1336
|
20-Jul-01
|
2:39:33 PM
|
541531715
|
20-Jul-01
|
2:39:17 PM
|
500
|
3.20
|
B
|
|
1336
|
20-Jul-01
|
2:39:33 PM
|
541531721
|
20-Jul-01
|
2:39:33 PM
|
500
|
3.20
|
S
|
|
1337
|
20-Jul-01
|
2:39:33 PM
|
541531717
|
20-Jul-01
|
2:39:22 PM
|
800
|
3.20
|
B
|
|
1337
|
20-Jul-01
|
2:39:33 PM
|
541531721
|
20-Jul-01
|
2:39:33 PM
|
800
|
3.20
|
S
|
|
1338
|
20-Jul-01
|
2:39:50 PM
|
541531722
|
20-Jul-01
|
2:39:50 PM
|
500
|
3.20
|
S
|
|
1338
|
20-Jul-01
|
2:39:50 PM
|
541531717
|
20-Jul-01
|
2:39:22 PM
|
500
|
3.20
|
B
|
|
1384
|
26-Jul-01
|
2:19:53 PM
|
571273163
|
26-Jul-01
|
2:19:48 PM
|
5000
|
3.50
|
B
|
|
1384
|
26-Jul-01
|
2:19:53 PM
|
571273167
|
26-Jul-01
|
2:19:53 PM
|
5000
|
3.50
|
S
|
|
1385
|
26-Jul-01
|
2:19:53 PM
|
571273167
|
26-Jul-01
|
2:19:53 PM
|
5000
|
3.50
|
S
|
|
1385
|
26-Jul-01
|
2:19:53 PM
|
571273163
|
26-Jul-01
|
2:19:48 PM
|
5000
|
3.50
|
B
|
|
1392
|
30-Jul-01
|
2:55:32 PM
|
511671378
|
30-Jul-01
|
2:55:32 PM
|
2000
|
4.60
|
S
|
|
1392
|
30-Jul-01
|
2:55:32 PM
|
511671375
|
30-Jul-01
|
2:55:23 PM
|
2000
|
4.60
|
B
|
|
1393
|
30-Jul-01
|
2:55:32 PM
|
511671375
|
30-Jul-01
|
2:55:23 PM
|
2000
|
4.60
|
B
|
|
1393
|
30-Jul-01
|
2:55:32 PM
|
511671378
|
30-Jul-01
|
2:55:32 PM
|
2000
|
4.60
|
S
|
|
1394
|
30-Jul-01
|
2:55:32 PM
|
511671375
|
30-Jul-01
|
2:55:23 PM
|
2000
|
4.60
|
B
|
|
1394
|
30-Jul-01
|
2:55:32 PM
|
511671378
|
30-Jul-01
|
2:55:32 PM
|
2000
|
4.60
|
S
|
|
1395
|
30-Jul-01
|
2:55:32 PM
|
511671378
|
30-Jul-01
|
2:55:32 PM
|
2000
|
4.60
|
S
|
|
1395
|
30-Jul-01
|
2:55:32 PM
|
511671375
|
30-Jul-01
|
2:55:23 PM
|
2000
|
4.60
|
B
|
|
1396
|
30-Jul-01
|
2:55:32 PM
|
511671375
|
30-Jul-01
|
2:55:23 PM
|
2000
|
4.60
|
B
|
|
1396
|
30-Jul-01
|
2:55:32 PM
|
511671378
|
30-Jul-01
|
2:55:32 PM
|
2000
|
4.60
|
S
|
|
1397
|
30-Jul-01
|
2:55:50 PM
|
511671381
|
30-Jul-01
|
2:55:45 PM
|
1000
|
4.60
|
B
|
|
1397
|
30-Jul-01
|
2:55:50 PM
|
511671382
|
30-Jul-01
|
2:55:50 PM
|
1000
|
4.60
|
S
|
|
1398
|
30-Jul-01
|
2:55:50 PM
|
511671382
|
30-Jul-01
|
2:55:50 PM
|
1000
|
4.60
|
S
|
|
1398
|
30-Jul-01
|
2:55:50 PM
|
511671381
|
30-Jul-01
|
2:55:45 PM
|
1000
|
4.60
|
B
|
|
1399
|
30-Jul-01
|
2:55:50 PM
|
511671381
|
30-Jul-01
|
2:55:45 PM
|
1000
|
4.60
|
B
|
|
1399
|
30-Jul-01
|
2:55:50 PM
|
511671382
|
30-Jul-01
|
2:55:50 PM
|
1000
|
4.60
|
S
|
|
1400
|
30-Jul-01
|
2:55:50 PM
|
511671381
|
30-Jul-01
|
2:55:45 PM
|
1000
|
4.60
|
B
|
|
1400
|
30-Jul-01
|
2:55:50 PM
|
511671382
|
30-Jul-01
|
2:55:50 PM
|
1000
|
4.60
|
S
|
|
1401
|
30-Jul-01
|
2:55:50 PM
|
511671382
|
30-Jul-01
|
2:55:50 PM
|
1000
|
4.60
|
S
|
|
1401
|
30-Jul-01
|
2:55:50 PM
|
511671381
|
30-Jul-01
|
2:55:45 PM
|
1000
|
4.60
|
B
|
|
1402
|
30-Jul-01
|
2:56:05 PM
|
511671385
|
30-Jul-01
|
2:56:01 PM
|
3000
|
4.60
|
B
|
|
1402
|
30-Jul-01
|
2:56:05 PM
|
511671386
|
30-Jul-01
|
2:56:05 PM
|
3000
|
4.60
|
S
|
|
1403
|
30-Jul-01
|
2:56:05 PM
|
511671385
|
30-Jul-01
|
2:56:01 PM
|
3000
|
4.60
|
B
|
|
1403
|
30-Jul-01
|
2:56:05 PM
|
511671386
|
30-Jul-01
|
2:56:05 PM
|
3000
|
4.60
|
S
|
|
1420
|
06-Aug-01
|
1:13:33 PM
|
541566859
|
06-Aug-01
|
1:13:33 PM
|
4000
|
3.60
|
S
|
|
1420
|
06-Aug-01
|
1:13:33 PM
|
541566849
|
06-Aug-01
|
1:13:12 PM
|
4000
|
3.60
|
B
|
|
1421
|
06-Aug-01
|
1:13:38 PM
|
541566852
|
06-Aug-01
|
1:13:18 PM
|
4000
|
3.60
|
B
|
|
1421
|
06-Aug-01
|
1:13:38 PM
|
541566860
|
06-Aug-01
|
1:13:38 PM
|
4000
|
3.60
|
S
|
|
1422
|
06-Aug-01
|
1:13:42 PM
|
541566854
|
06-Aug-01
|
1:13:23 PM
|
4000
|
3.60
|
B
|
|
1422
|
06-Aug-01
|
1:13:42 PM
|
541566862
|
06-Aug-01
|
1:13:42 PM
|
4000
|
3.60
|
S
|
|
1423
|
06-Aug-01
|
1:13:46 PM
|
541566863
|
06-Aug-01
|
1:13:46 PM
|
4000
|
3.60
|
S
|
|
1423
|
06-Aug-01
|
1:13:46 PM
|
541566857
|
06-Aug-01
|
1:13:28 PM
|
4000
|
3.60
|
B
|
|
1451
|
14-Aug-01
|
3:05:48 PM
|
511729991
|
14-Aug-01
|
3:05:41 PM
|
3200
|
2.70
|
B
|
|
1451
|
14-Aug-01
|
3:05:48 PM
|
511729996
|
14-Aug-01
|
3:05:48 PM
|
3200
|
2.70
|
S
|
|
1452
|
14-Aug-01
|
3:05:52 PM
|
511729994
|
14-Aug-01
|
3:05:46 PM
|
2000
|
2.70
|
B
|
|
1452
|
14-Aug-01
|
3:05:52 PM
|
511730000
|
14-Aug-01
|
3:05:51 PM
|
2000
|
2.70
|
S
|
|
1455
|
17-Aug-01
|
3:28:21 PM
|
541593823
|
17-Aug-01
|
3:28:09 PM
|
5000
|
3.30
|
B
|
|
1455
|
17-Aug-01
|
3:28:21 PM
|
541593827
|
17-Aug-01
|
3:28:20 PM
|
5000
|
3.30
|
S
|
|
1456
|
17-Aug-01
|
3:28:23 PM
|
541593830
|
17-Aug-01
|
3:28:23 PM
|
5000
|
3.30
|
S
|
|
1456
|
17-Aug-01
|
3:28:23 PM
|
541593824
|
17-Aug-01
|
3:28:13 PM
|
5000
|
3.30
|
B
|
|
1457
|
17-Aug-01
|
3:28:26 PM
|
541593825
|
17-Aug-01
|
3:28:17 PM
|
5000
|
3.30
|
B
|
|
1457
|
17-Aug-01
|
3:28:26 PM
|
541593831
|
17-Aug-01
|
3:28:26 PM
|
5000
|
3.30
|
S
|
|
1458
|
17-Aug-01
|
3:28:43 PM
|
541593832
|
17-Aug-01
|
3:28:31 PM
|
5000
|
3.30
|
B
|
|
1458
|
17-Aug-01
|
3:28:43 PM
|
541593835
|
17-Aug-01
|
3:28:42 PM
|
5000
|
3.30
|
S
|
|
1459
|
17-Aug-01
|
3:28:46 PM
|
541593836
|
17-Aug-01
|
3:28:46 PM
|
5000
|
3.30
|
S
|
|
1459
|
17-Aug-01
|
3:28:46 PM
|
541593833
|
17-Aug-01
|
3:28:34 PM
|
5000
|
3.30
|
B
|
|
1460
|
17-Aug-01
|
3:28:48 PM
|
541593834
|
17-Aug-01
|
3:28:38 PM
|
5000
|
3.30
|
B
|
|
1460
|
17-Aug-01
|
3:28:48 PM
|
541593837
|
17-Aug-01
|
3:28:48 PM
|
5000
|
3.30
|
S
|
|
1463
|
21-Aug-01
|
11:23:55 AM
|
571321264
|
21-Aug-01
|
11:22:59 AM
|
200
|
3.50
|
B
|
|
1463
|
21-Aug-01
|
11:23:55 AM
|
571321267
|
21-Aug-01
|
11:23:55 AM
|
200
|
3.50
|
S
|
|
1464
|
21-Aug-01
|
11:25:13 AM
|
571321271
|
21-Aug-01
|
11:24:51 AM
|
300
|
3.60
|
B
|
|
1464
|
21-Aug-01
|
11:25:13 AM
|
571321272
|
21-Aug-01
|
11:25:13 AM
|
300
|
3.60
|
S
|
|
1467
|
21-Aug-01
|
12:04:35 PM
|
571321378
|
21-Aug-01
|
12:04:35 PM
|
500
|
3.40
|
S
|
|
1467
|
21-Aug-01
|
12:04:35 PM
|
571321377
|
21-Aug-01
|
12:04:24 PM
|
500
|
3.40
|
B
|
|
1470
|
21-Aug-01
|
12:45:00 PM
|
571321597
|
21-Aug-01
|
12:44:49 PM
|
600
|
3.10
|
B
|
|
1470
|
21-Aug-01
|
12:45:00 PM
|
571321598
|
21-Aug-01
|
12:45:00 PM
|
600
|
3.10
|
S
|
|
1463
|
21-Aug-01
|
11:23:55 AM
|
571321264
|
21-Aug-01
|
11:22:59 AM
|
200
|
3.50
|
B
|
|
1463
|
21-Aug-01
|
11:23:55 AM
|
571321267
|
21-Aug-01
|
11:23:55 AM
|
200
|
3.50
|
S
|
|
1464
|
21-Aug-01
|
11:25:13 AM
|
571321271
|
21-Aug-01
|
11:24:51 AM
|
300
|
3.60
|
B
|
|
1464
|
21-Aug-01
|
11:25:13 AM
|
571321272
|
21-Aug-01
|
11:25:13 AM
|
300
|
3.60
|
S
|
|
1467
|
21-Aug-01
|
12:04:35 PM
|
571321378
|
21-Aug-01
|
12:04:35 PM
|
500
|
3.40
|
S
|
|
1467
|
21-Aug-01
|
12:04:35 PM
|
571321377
|
21-Aug-01
|
12:04:24 PM
|
500
|
3.40
|
B
|
|
1470
|
21-Aug-01
|
12:45:00 PM
|
571321597
|
21-Aug-01
|
12:44:49 PM
|
600
|
3.10
|
B
|
|
1470
|
21-Aug-01
|
12:45:00 PM
|
571321598
|
21-Aug-01
|
12:45:00 PM
|
600
|
3.10
|
S
|
|
1545
|
30-Aug-01
|
1:40:22 PM
|
541621726
|
30-Aug-01
|
1:40:16 PM
|
1000
|
4.00
|
B
|
|
1545
|
30-Aug-01
|
1:40:22 PM
|
541621728
|
30-Aug-01
|
1:40:22 PM
|
1000
|
4.00
|
S
|
|
1546
|
30-Aug-01
|
2:02:43 PM
|
541621775
|
30-Aug-01
|
2:02:36 PM
|
2500
|
4.00
|
B
|
|
1546
|
30-Aug-01
|
2:02:43 PM
|
541621777
|
30-Aug-01
|
2:02:42 PM
|
2500
|
4.00
|
S
|
|
1548
|
31-Aug-01
|
3:06:13 PM
|
511770000
|
31-Aug-01
|
3:06:13 PM
|
2000
|
4.80
|
S
|
|
1548
|
31-Aug-01
|
3:06:13 PM
|
511769997
|
31-Aug-01
|
3:06:01 PM
|
2000
|
4.80
|
B
|
|
1549
|
31-Aug-01
|
3:06:15 PM
|
511769998
|
31-Aug-01
|
3:06:05 PM
|
2000
|
4.80
|
B
|
|
1549
|
31-Aug-01
|
3:06:15 PM
|
511770002
|
31-Aug-01
|
3:06:15 PM
|
2000
|
4.80
|
S
|
|
1550
|
31-Aug-01
|
3:06:18 PM
|
511769999
|
31-Aug-01
|
3:06:10 PM
|
1000
|
4.80
|
B
|
|
1550
|
31-Aug-01
|
3:06:18 PM
|
511770003
|
31-Aug-01
|
3:06:18 PM
|
1000
|
4.80
|
S
|
1.7 In view of the above, it has been alleged that the Broker had prima facie violated regulation 7 of the Broker Regulations, clause A (1), A (2) and A (4) of the Code of Conduct specified in the Broker Regulations and regulation 4 (a) and 4 (b) of the FUTP Regulations.
2.0 APPOINTMENT OF ENQUIRY OFFICER:
2.1 SEBI appointed an Enquiry Officer vide order dated July 8, 2004 under regulation 5(1) of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as the Enquiry Regulations) to enquire into the alleged violations committed by the Broker as mentioned above while dealing in the shares of the company.
2.2 Accordingly, a notice dated August 26, 2004 was issued to the Broker asking it to show cause as to why recommendations under regulation 13 (1) of the Enquiry Regulations should not be imposed against it. The copy of the proceedings in respect of the appointment of the Enquiry Officer and the findings of the investigation were also forwarded to the Broker with the said show cause notice. The Broker filed its reply to the said show cause notice and also appeared before the Enquiry Officer and made submissions. The Enquiry Officer in his report dated September 30, 2005 did not recommend any action against the Broker as according to him the charges leveled against the Broker were not established.
3.0 CONSIDERATION OF ISSUES AND FINDINGS.
3.1 I note that the Broker had executed substantial trades in the shares of the company, the shares of which were illiquid at the time of the trades. In the process, the Broker had executed several cross deals almost on a regular basis. Both sell and buy orders were placed almost at the same time from the single terminal of the Broker with the same quantity, price etc. In the process, the Broker had allowed its clients to execute trades at a pre determined price and time and thereby, impaired the market integrity by entering into trades which were not genuine. In view of the above, I observe that the Broker has prima facie violated the provisions of Regulation 4 (a) and (b) of the FUTP Regulations and clauses A (1), (2) and (4) of the Code of Conduct stipulated in Schedule II to the Broker Regulations.
3.2 Accordingly a notice dated April 21, 2006 was issued to the Broker asking it to show cause as to why a major penalty of suspension of the certificate of registration for a period of six months should not be imposed against it. The Broker vide letter dated May 16, 2006 requested SEBI to grant time upto May 31, 2006 to file its reply.
3.3 The Broker vide letter dated June 1, 2006 inter alia stated that it had placed purchase order for a specific quantity against the sell order received for the same quantity. The Broker clarified that all the transactions were recorded at CSE at the prevailing market price. The Broker denied of executing matching transactions and that it had only executed the trades as per the orders received from its clients. The Broker further stated that it had not violated any of the provisions of the law of the land and further assured that it would be more vigilant, cautious and careful in all its future dealings and transactions and would maintain highest standard of professionalism and ethics in all its transactions.
3.4 The Broker was also granted an opportunity of hearing on February 19, 2007. Shri S.B. Bhutra, Proprietor of the Broker appeared before me and reiterated the submissions made by the Broker vide letter dated June 1, 2006.
3.5 I have perused the investigation report, the Enquiry Report, the show cause notice dated April 21, 2006, the reply of the Broker dated June 1, 2006, the oral submissions made on behalf of the Broker at the time of the hearing and other materials available on record. At the outset, I would like to deal with the contention of the Broker that the Enquiry Officer had at length perused all the records and submissions made on behalf of it which was supported with necessary documentary evidences. In terms of the provisions of the Enquiry Regulations, the report of the Enquiry Officer is only recommendatory in nature and he may only recommend for the imposition of either minor or major penalties as mentioned thereof.
3.6 In terms of regulation 13(4) of the Enquiry Regulations, the competent authority {Chairman or Member (as the case may be)}, upon the receipt of Enquiry Report is empowered to pass such order as he may deem fit after considering the reply filed by the intermediary concerned. The expression “pass such order as he may deem fit” is not only restricted to the passing of orders which are final in character. If the competent authority has the jurisdiction to pass any order in reference to a specific case called for by it as it thinks fit, obviously it can come to a different conclusion from the one to which the Enquiry Officer had arrived, on the same set of facts. Regulation 13(4) of the Enquiry Regulations confers a wide jurisdiction enabling the Competent Authority to take an entirely different view on the same set of facts. In a given case, the competent authority is empowered to take into account the material factors which were available on record but were not considered by the Enquiry Officer, for the purposes of doing justice. I am of the considered view that the trades executed by the Broker in the shares of the company on behalf of its clients are in prima facie violation of the provisions of the FUTP Regulations and the Code of Conduct specified in the Broker Regulations and hence called for a major penalty as provided in the Enquiry Regulations. Accordingly, the show cause notice dated April 21, 2006 was issued to the Broker and thereby, an opportunity was provided to the Broker to make its submissions in respect of the show cause notice and the proposed major penalty.
3.7 The Broker was also granted an opportunity of hearing by me on February 19, 2007. The said opportunities were provided by SEBI to the Broker towards the compliance of the principles of natural justice, so that the Broker could make its submission/explanation, if any, against the proposal to impose major penalty. Therefore, as evident from regulation 13(4) of the Enquiry Regulations, the recommendations of the Enquiry Officer are not binding on the Competent Authority i.e. Chairman or the Member, SEBI, as the case may be and he can pass such order as it thinks fit. In view of the above, I am unable to accept the contention of the Broker and accordingly the same is rejected.
3.8 The Broker has not disputed the trades done by it on behalf of its clients in the shares of the company at CSE during July, 2001 to September, 2001. In the said process, the Broker had executed trades for 6,55,550 (between July 2, 2001 and August 31, 2001) shares of the said company out of the total turnover of 64,86,302 shares at CSE. I note that the majority of the aforesaid trades of the Broker were by way of cross deals executed at its single terminal. The details of the cross deals executed by the Broker are explained in detail in the table given at para 1.6 above..
3.9 I note that the cross deals accounted for majority of the trades of the Broker at CSE in the shares of the company between July, 2001 to August, 2001 as shown in the table at para 1.6. The continuity and the consistency with which the said cross deals were executed by the Broker on behalf of its clients in the shares of the company cannot be a matter of coincidence, considering its nature (the price, quantity and time) and its recurrence in a row. It can be seen that most of the buy and the sell orders were placed by the Broker at almost the same time, with just a difference of few seconds. The said proximity in the placing of orders at the same price and for the same quantity, resulted in the matching of the aforesaid transactions, with all the ingredients i.e. quantity, price and the time, required to conclude the trades. Above all it has to be seen that all the transactions were executed at the single terminal of the Broker.
3.10 The method and manner in which the said cross deals were executed would clearly establish that the same were meant for the purpose of manipulating the price / volume in the shares of the company, against the fundamentals of the functioning of the securities market. The transactions executed by the Broker undoubtedly increased the volume of the shares of the company artificially to induce the genuine investors to invest in the said shares.
3.11 It can be seen from the table shown at para 1.6 above, that the cross deals executed by the Broker comprised of 90% of its total volume in the shares of the company, which was illiquid at the time of the said trades. In the given circumstances, considering the nature of the trades (uniformity in time, quantity and price etc.), it can not be said that the said transactions were genuine. The series of trades in the form of cross deals, considering its numbers, quantity etc. would only lead to the finding that all the deals were done with the purpose of manipulating the price/ volume in the shares of the company and thereby the securities market to the detriment of the genuine investors. The said concerted level of activity is only compatible with the purposes of manipulating the securities market on the part of the Broker. Such transactions undoubtedly created an artificial market to mislead the genuine investors and the said transactions create false volumes in the shares of the company. It is too much of a coincidence over too long a period in too many transactions when the same stock broker had entered into buy and sell orders for the same quantity of shares almost simultaneously.
3.12 The Broker should have stopped executing such transactions which would affect the interest of the genuine investors in the securities market. The Broker failed to do such exercise which was expected from a prudent stock broker who had a duty not only towards its client but also towards the securities market. On the other hand he continued to execute such trades. The cross deals were executed from the same terminal and almost at the same time. The trades executed by the Broker were not genuine in the sense that the said trades were executed between client to client at the same terminal. The Broker, by virtue of its presence, on both sides of the terminal, was a necessary party and privy to the ongoing manipulation which was detrimental to the interest of unsuspecting investors. Therefore, his plea of innocence based upon market dynamics can not pass muster, when such dynamics was engineered by artificiality to jack up the price for obvious collateral benefits to the parties at the cost of the integrity of the market.
3.13 In the above facts and circumstances, it is fairly established that the trades of the Broker in the shares of the company were done for the purpose of creating false and misleading appearance of trading of the shares of the said company and that the same should be within the knowledge of the Broker, when the anonymity of screen - based trading has been breached by his pervasive presence on both sides. Obviously the tell – tale circumstances surrounding the said transactions make it suspect. In spite of the same, the fact that the Broker executed cross deals for his clients substantially lends support to the finding that the Broker was a necessary party to the transactions giving rise to artificiality in the market. Instead of exercising caution, the Broker had executed large number of trades and thereby was instrumental in creating artificial volumes in the shares of the company.
3.14 In this context, the provisions of Regulation 4 of the said Regulations is reproduced herein below for the sake of reference.
“No person shall -
(a) effect, take part in, or enter into, either directly or indirectly, transactions in securities, with the intention of artificially raising or depressing the prices of securities and thereby inducing the sale or purchase of securities by any person;
(b) indulge in any act, which is calculated to create a false or misleading appearance of trading on the securities market;
(c) indulge in any act which results in reflection of prices of securities based on transactions that are not genuine trade transactions;
(d) enter into a purchase or sale of any securities, not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress , or cause fluctuations in the market price of securities.
(e) pay, offer or agree to pay or offer, directly or indirectly, to any person any money or money’s worth for inducing another person to purchase or sell any security with the sole object of inflating, depressing, or causing fluctuations in the market price of securities”.
3.15 The peculiar nature of the trades executed by the Broker and the modus operandi in those transactions persuades me to the conclusion that these transactions were the outcome of a predetermined and planned action. In the present case, admittedly the Broker itself was executing transactions on both sides (buy and sell). The Broker allowed its clients to trade in the shares of the company substantially. Cross deals involving interplay of market forces, pre supposes the active participation of the Broker. In the present case, the Broker was directly involved and was trading on both sides of the transactions and the same itself will prove the direct participation of the Broker in the entire transactions that took place in the shares of the company for the purpose of giving a misleading appearance of trading in the market and thereby artificially increasing the volume and price of the said shares.
3.16 In the facts and circumstances, the trades executed by the Broker in the shares of the company at CSE as explained above in detail, would only lead to the conclusion that same were not genuine which created misleading appearance of trading on the securities market. The Broker’s direct participation (on both buy and sell sides) would prove him guilty in respect of the market manipulation.
3.17 I further note that the trades executed by the Broker in the shares of the company as aforesaid created a false appearance of trading and was intended to operate only as a device to inflate, depress, or cause fluctuations in the said shares. Once the factum of manipulation is proved, then as observed by SAT in the matter of Ketan Parekh Vs SEBI, the investors are affected by the said manipulation. The relevant observation made by SAT in this regard is reproduced as below:
“When a person takes part in or enters into transactions in securities with the intention to artificially raise or depress the price he thereby automatically induces the innocent investors in the market to buy / sell their stocks. The buyer or the seller is invariably influenced by the price of the stocks and if that is being manipulated the person doing so is necessarily influencing the decision of the buyer / seller thereby inducing him to buy or sell depending upon how the market has been manipulated. We are therefore of the view that inducement to any person to buy or sell securities is the necessary consequence of manipulation and flows therefrom. In other words, if the factum of manipulation is established it will necessarily follow that the investors in the market had been induced to buy or sell and that no further proof in this regard is required. The market, as already observed, is so wide spread that it may not be humanly possible for the Board to track the persons who were actually induced to buy or sell securities as a result of manipulation and law can never impose on the Board a burden which is impossible to be discharged.”
3.18 A cumulative analysis of the facts of the case, clearly indicate that the Broker did not act in a bonafide manner. On the contrary, the above facts highlight its complete involvement in the creation of misleading market in the shares of the company and the creation of artificial volume and price in the said shares.
3.19 The natural corollary to this issue is whether the Broker had maintained high standards of integrity, promptitude, fairness and exercised due skill, care and diligence in the conduct of its business. In terms of the Code of Conduct specified in the Broker Regulations, a stock broker shall not create false market or indulge in any act detrimental to the investors’ interest or which leads to the interference with the fair and smooth functioning of the securities market. The trades (including the cross deals) executed by the Broker as explained in detail above would prove that the said trades in the shares of the company created a misleading appearance in the market and further created artificial volume and price in the said shares by vitiating the price movement mechanism prevailing in the securities market. It further shows that the Broker had not exercised due skill, care and diligence and not maintained high standards of integrity, promptitude, fairness in the conduct of its business.
3.20 Therefore, it is fairly established that the Broker had violated the provisions of Regulations 4(a) and (b) of the FUTP Regulations and clauses A(1), (2) and (4) of the Code of Conduct specified in Schedule II of the Broker Regulations.
3.21 In the facts and circumstances, the violations committed by the Broker call for penalty and therefore, I do not find any reason to agree with the recommendation of the Enquiry Officer. Considering the facts of the case as discussed in detail, I find that this is a fit case for imposing major penalty of suspension of the certificate of registration of the Broker, as ordered herein under.
4.0 ORDER
4.1 In view of the foregoing, I, 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 Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, hereby impose a major penalty of suspension of the certificate of registration of S.B. Bhutra & Co. {Registration no. INB 030037516}, Member, Calcutta Stock Exchange Association Ltd. for a period of six months.
4.2 This order shall come into force immediately on the expiry of 21 days from the date of this order.
G ANANTHARAMAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OFINDIA
Date:13- 4- 07
Place: Mumbai :