BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA
CORAM : V.K CHOPRA, WHOLE TIME MEMBER
ORDER
Under regulation 13(4) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 against Mahesh Kumar Damani, Member, NSE, for the dealings in the scrips of Ranbaxy Laboratories 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 Ranbaxy Laboratories Ltd.
2. SEBI, after considering the investigation report, appointed an Enquiry Officer vide Order dated November 29, 2002 to enquire into the violations allegedly committed by the broker Mahesh Kumar Damani (hereinafter referred to in short as “the Broker”) under the provisions of Regulation 4(a), (b) (c) & (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995, Regulation 7 read with the clause A (3) and (4) of Code of Conduct as specified in Schedule II of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 and Rules, Regulations and Bye-laws of Stock Exchange.
3. The Enquiry Officer submitted a report dated February 26, 2004. I have perused the said 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 Ranbaxy Laboratories Ltd. It is observed from the said report that the Enquiry Officer has recommended no action against the Broker. While giving the above recommendation, the Enquiry Officer has also observed that the Broker may be cautioned to be careful in future since benefit of doubt has been given to him in the matter. The Enquiry Officer observed that the Broker is required to develop system to monitor the transactions executed on their trading terminals on a continuous basis.
4. On the basis of the above observation, a post enquiry show cause notice dated September 24, 2004 was issued to the Broker. The Broker submitted reply to the said show cause notice vide letter dated October 12, 2004 stating that he monitors trading activities through master online terminal and he had already taken steps to develop a software so as to get details of both buy and sale transactions being executed in his terminals. It is also stated that the compliance officer has already been instructed to monitor such transactions and report the same to him on weekly basis. Further, the Broker assured his compliance with the directions as recommended by the Enquiry Officer.
5. Having considered this aspect and totality of the facts and circumstances of the case and the findings/recommendations of the Enquiry Officer mentioned in the report. I have come to the conclusion that the Enquiry Officer has rightly concluded that 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 stock broker failed to exercise due skill, care and diligence in the conduct of its business.
6. Therefore, I find no reason to differ with the above recommendations of the Enquiry Officer. However, as the benefit of doubt was given by the Enquiry Officer, I also felt it necessary to direct the Broker to be careful in future.
7. 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 and the post enquiry show cause notice without imposing any penalty or direction against the Broker. However, I direct the Broker Mahesh Kumar Damani (SEBI Registration No. INB230661413 - NSE and INB010661412 - BSE) to be careful in future, while dealing in securities market.
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Place: Mumbai
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V. K. CHOPRA
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Date: June 14, 2007
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WHOLE TIME MEMBER
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SECURITIES AND EXCHANGE BOARD OF INDIA
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