SECURITIES AND EXCHANGE BOARD OF INDIA
QUORAM: G.ANANTHARAMAN, WHOLE TIME MEMBER
IN THE MATTER OF DEALINGS IN THE SHARES BY SHRI. MATHEW EASOW AND HIS ASSOCIATE ENTITIES
DATE OF HEARING: April 18, 2006.
APPEARANCES:
FOR NOTICEES: Shri. Somesekhar Sundaresan
Shri. Joby Mathew
FOR SEBI : Shri Manoj Kumar, Deputy General Manager
ORDER
(UNDER SECTION 11D OF SEBI ACT, 1992)
1. M/s Mathew Easow Financial Services (hereinafter referred to as M.E. Financial) is a sub broker registered with Securities and Exchange Board of India, (hereinafter to be referred as SEBI) and acts as a sub broker of Eureka Stock & Share Broking Services Ltd., member, National Stock Exchange of India Ltd. (hereinafter to be referred as NSE). Shri. Mathew Easow is a Chartered Accountant and Financial Analyst who is currently Chairman of Mathew Easow Research Securities Ltd. (hereinafter to be referred as ME Research), whose shares are listed in Bombay Stock Exchange Ltd. (hereinafter to be referred as BSE) and NSE. Mathew Easow Fiscal Services Limited (hereinafter to be referred as M.E. Fiscal) is a trading company whose income is generated from trading in securities. It is also a dealer of Over the Counter Exchange of India, (hereinafter to be referred as OTCEI) and stock broker registered with Securities and Exchange Board of India, (hereinafter to be referred as SEBI). Mathew Easow holds approximately 79% of the shares in M.E. Fiscal.
2. By an ad interim exparte interim order dated January 19, 2006 under section 11D of SEBI Act,1992, the following directions were passed by SEBI for the reasons stated therein.
· Mathew Easow was directed to cease and desist from giving any recommendations about any investment in the securities market in any public media which amounts to violation of regulation 4(2)(f) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations,2003(hereinafter to be referred as FUTP Regulations)
· ME Financial and ME Fiscal were also directed to cease and desist from committing any violation of clause B(7A) of the Code of Conduct for Stock Brokers laid down in Schedule II read with regulation 7 and Schedule II read with regulation 15 of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992( hereinafter to be referred as Stock Brokers Regulations)
3. Subsequently, Mathew Easow on his behalf and on behalf of ME Fiscal, ME Financial and ME Research, filed reply vide letter dated February 14, 2006.
4. An opportunity of personal hearing was given to Shri Mathew Easow and his associate companies before me at the SEBI Eastern Regional Office on April 18, 2006 . Shri Mathew Easow and his associate entities were represented before me by their authorized representatives.
5. I have carefully considered the prima facie findings as recorded in the ad interim exparte order dated January 19, 2006 and the submissions made by the noticees. I find that certain recommendations were made by Mathew Easow, the details of which were given at para 2.1 of the ad interim ex-parte order. I further find that the trade data gathered from the exchanges revealed that Mathew Easow dealt in the shares of Kalpana Industries, CESC Ltd. Ahlcon Parenteral, and Albert David through his associate companies i.e. ME Research and ME Fiscal. The details of their trading were given in the ad interim ex-parte order at para 2.2 at table B.
6. I have noted that M.E. Fiscal and M.E. Financial are associate entities of Mathew Easow. I find that the reply was filed by ME Research signed by Mathew Easow on his behalf and on behalf of the above three entities. I find that M.E. Fiscal is a stock broker and ME Financial is a sub broker, registered with SEBI. Shri. Mathew Easow is a representative of these two entities. No documentary evidence was produced before me in substantiation of the claim of the noticees that necessary disclosure under Clause B (7A) of the Code of Conduct for Stock Brokers and Sub Brokers laid down in Schedule II read with Regulation 7 and 15 of the Stock Brokers Regulations, was made both by the broker and sub broker with respect to their position in the said four scrips, while making the recommendations.
7. I further hold that the subsequent trading behaviour of the associated companies of Mathew Easow after making the recommendation, in the above said four scrips clearly comes within the prohibitive ambit of Regulation 4(2)(f) of FUTP Regulations, since Mathew Easow who is a person dealing in securities had published information to the public which he did not believe to be true in the course of dealing in securities.
8. Further I have noted that the Adjudication Officer vide his order dated September 26, 2006 imposed a penalty of Rs. 20,00,000 on Shri Mathew Easow for the same violation, which will act as a deterent and therefore, there is no need to continue the directions passed under section 11D vide the interim order dated January 19, 2006 .
9. In view of the above, in exercise of the powers delegated to me in terms of Section 19 of the Securities and Exchange Board of India Act 1992 I, hereby dispose off the matter, as above.
| Place : Mumbai |
G. ANANTHARAMAN
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| Date November 08, 2006 |
WHOLE TIME MEMBER |
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SECURITIES AND EXCHANGE BOARD OF INDIA
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