Order against Bijal Securities Pvt. Ltd in the scrip of Sword and Shield Pharma Ltd

WTM/TCN/23 / IVD/06/07

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM : Dr. T.C. NAIR, 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 Bijal Securities Pvt. Ltd. sub-broker affiliated to VSE Securities Ltd. for the dealings in the scrip of Sword and Shield Pharma Ltd.

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) had conducted investigation into the affairs relating to the trading of the scrip of Sword and Shield Pharma Ltd. (hereinafter referred to as “SSPL”) subsequent to the unusual increase in the price and volume of the scrip during the period - 3^rd May, 2001 to 6^th July, 2001. It was noticed in the investigation that a group of entities were acting in concert for executing circular and structured trades to affect the price of the scrip.

2. Bijal Securities Pvt. Ltd. (BSPL) a broker of Vadodara Stock Exchange Ltd. and also a sub broker affiliated to VSE Securities Ltd., was alleged to have executed transactions for M/s. Nokia Finance International Pvt. Ltd. (Nokia) who was stated to be involved in the manipulation of the scrip.  It was alleged that BSPL aided and abetted the client in the manipulation of the scrip and had failed to exercise due diligence while dealing with the client.

3. In view of the findings of the investigation, an Enquiry Officer was appointed vide Order dated October 14, 2004 to enquire into the alleged violations committed by BSPL. On completion of enquiry, the Enquiry Officer submitted his report dated June 28, 2005 with no penalty recommendation.

4. In the said report, the Enquiry Officer found that Nokia was acting for its clients through BSPL. Though there appears to be transfer of securities and funds amongst the clients, on the basis of evidence available on record, it was not established that BSPL was aware of the conspiracy among the clients. Further, no evidence is available on record evidencing any connection or relationship with the clients except broker and client relationship. Based on the evidence available on record, the Enquiry Officer stated that it cannot be concluded that BSPL played a manipulative role along with the clients in the matter. In view of the same, BSPL did not violate the provisions of Regulation 4 (b), (c) and (d) of FUTP and clauses A (2), A(3) and A (4) of Code of Conduct for Stock brokers as specified in Schedule II under Regulation 15 of the Stock Brokers Regulations.

5. After taking into consideration the facts and circumstances of the case and the findings 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 BSPL have not been established with reasonably good evidence. Further, from the legal point of view, I feel that there is no evidence on record to prove that BSPL failed to exercise due care, skill and diligence in the conduct of its business or has indulged into manipulative role with its clients.

6. 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 Bijal Securities Pvt. Ltd.