SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

UNDER SECTIONS 11B AND 11(4) OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF (1) PRIME CAPITAL MARKET LTD., (2) SUBH LAXMI PROJECTS LTD., (3) GLOBAL CAPITAL MARKET LTD., (4) BANKAM INVESTMENTS LTD., (5) S. T. SERVICES LTD. AND (6) AMLUCKIE INVESTMENT CO. LTD.

WTM/GA/42/IVD/1/06

1. Background of the Cases

1.1 Trading and sharp rise in a short period in shares of companies with small market capitalization commonly referred to as “small cap stocks” or “penny stocks” have been engaging the attention of SEBI and have been under the surveillance of SEBI and the stock exchanges for quite some time. The following six companies listed on the Calcutta Stock Exchange (CSE) are a few examples of such “small cap” companies, whose shares witnessed a sharp price variation ranging from 200% to 1900% within a short period between March 2005 and September 2005 on the CSE, as shown in Table 1:

i. Prime Capital Market Ltd.

ii. Subh Laxmi Projects Ltd.

iii. Global Capital Market Ltd.

iv. Bankam Investments Ltd.

v. S. T. Services Ltd.

vi. Amluckie Investment Co.

Table 1: Price movement of the shares of six companies listed on the CSE

between March and September 2005

S. No	Name of the Company	Period	Lowest Price (in Rs.)	Highest Price (in Rs.)	% Price rise	Duration
1	Prime Capital Market Ltd.	17/3/05 to 15/9/05	14.00	280.40	1903	5 months 28 days
2	Subh Laxmi Projects Ltd.	17/3/05 to 14/7/05	21.30	248.50	1067	3 months 27 days
3	Global Capital Market Ltd.	17/6/05 to 16/9/05	1.25	13.50	980	3 months
4	Bankam Investments Ltd.	9/6/05 to 16/9/05	2.10	16.85	702	3 months 7 days
5	S. T. Services Ltd.	18/3/05 to 16/9/05	12.10	96.50	698	5 months 28 days
6	Amluckie Investment Co.	1/4/05 to 23/8/05	95.00	298.50	214	4 months 22 days

1.2 In view of the steep increase in the price of the shares of the above mentioned companies, SEBI immediately examined the transactions in these shares on the CSE during the relevant period and on the basis of the preliminary findings summarized below, passed ad interim ex-parte orders against the companies as well as brokers who dealt in the shares of these companies in exercise of the powers conferred by the SEBI Act and relevant regulations.

2. Preliminary Findings

Prime Capital Market Ltd. (PCML)

2.1 Prime Capital Market Ltd. (PCML), a company in the business of finance and investment, is one of the listed companies on the CSE. The prices of its shares rose steeply by 1903% in a span of 5 months and 28 days between March 17 and September 15, 2005 from Rs.14 to Rs.280.40. The company had filed its financial results with the CSE also only upto the period ended March 31, 2003. The financial statements filed by the company with the CSE for the years ended March 31, 2002 and March 31, 2003 that the company showed that the company incurred net losses of Rs.4 lakh and Rs.6 lakh respectively in these years. From the data available with the CSE, it appeared that the company had not bothered to file any financial statements for the years ended March 31, 2004 and March 31, 2005, which confirmed the belief that the company had scant regard for public disclosure of its financial results. In the absence of any details about the current financial position of the company and poor performance of the company in the previous years, the astronomical rise in the price of 1903% between March 17, and September 15, 2005 was clearly artificial.

2.2 An analysis of the trading data given in Table 2 for the said period at the CSE revealed that only three brokers namely, M/s DB & Co., M/s Sanju Kabra and M/s Shivam Stock Broking have contributed to most of the turnover of the PCML’s shares.

Table 2: The turnover of three brokers in the shares of PCML

Sl.No	Member Name	Trading Data
Sl.No	Member Name	No. of shares bought	% to Total Buy	No. of shares sold	% to Total Sell	Total no. of shares	% to Total Buy & Sell
1	D B & Co	759252	41.68	759150	41.67	1518402	41.67
2	Sanju Kabra	161601	8.87	920550	50.53	1082151	29.70
3	Shivam Stock Broking	752950	41.33	15901	0.87	768851	21.10
	Total	1673803	91.88%	1695601	93.07	3369404	92.47

2.3 The trades executed by the three brokers were mostly as cross deals (wherein the buying and selling broker is the same) and these members acted as counter party of their own transactions. The cross deals executed by D B & Co and the transactions between Sanju Kabra and Shivam Stock Broking constituted the major portion of trading in the shares of the company and were largely responsible for the price rise in the shares.

2.4 The preliminary examination of the transactions in PCML for the period March 17 and September 15, 2005 thus led to the conclusion that the price movement of the shares was artificial and was designed to create a false market.

Table 3: Extent of cross deals between the three brokers in the shares of PCML between March 17 and September 15, 2005

Sl No	Name of the broker	Cross and Matched transactions
Sl No	Name of the broker	D B & Co	Sanju Kabra	Shivam Stock Broking
1	D B & Co	1511702 (99.5%)	3100 (0.2)	3000 (0.2)
2	Sanju Kabra	3100 (0.2)	316400 (29.2)	740250 (68.4)
3	Shivam Stock Broking	3000 (0.3)	740250 (96.2)	25600 (3.3)

(significant percentages shown in bold)

Subh Laxmi Projects Ltd. (SLPL)

2..5 Subh Laxmi Projects Ltd. (SLPL) is another finance and investment company, listed on the CSE, whose share prices rose steeply during the period March to July, 2005. In a span of 3 months and 27 days, between March 17, 2005 to July 14, 2005, the share price of the company rose by 1067% from Rs.21.30 to Rs.248.50. The company had filed its financial results to the CSE only till the March 31, 2004. For the financial year ended March 31, 2004, the company did not earn any profit, though it recorded sales of Rs.61 lakh. During the previous year, the company did not have any income. The paid up capital of the company is Rs.7.52 crore. Thus, the available information indicated poor financial performance of the company. Since the company did not file any financial statements for the year ended March 2005 and thereafter, indicating scant regard of the company towards public disclosure. In the absence of any details about the current financial position of the company and poor performance of the company in the previous years, the astronomical rise in the price of 1903% between March 17, and July 14, 2005 was clearly artificial and intended to create a false market.

2.6 An analysis of the trading data given in table 4 for the said period at the CSE revealed that only two brokers, namely, M/s Ahilya Commercial Pvt. Ltd. and M/s Shyam Lal Sultania have contributed around 26% of the total turnover of the SLPL’s shares.

Table 4: The turnover of two brokers in the shares of SLPL

Sl.No	Member Name	Trading Data
Sl.No	Member Name	No. of shares bought	% to Total Buy	No. of shares sold	% to Total Sell	Total no. of shares	% to Total Buy & Sell
1	Ahilya Commercial	333800	13.71	317900	13.06	651700	13.38
2	Shyam Lal Sultania	258550	10.62	352600	14.48	611150	12.55
	Total	592350	24.33%	670500	27.54	1262850	25.93

2.7 The trades executed by the two brokers were mostly as cross deals (wherein the buying and selling broker is the same) and these brokers acted as counter party of their own transactions. The cross deals executed by Ahilya Commercial and Shyamlal Sultania constituted the major portion of trading in the shares of the company and were largely responsible for the price rise in the shares.

2.8 The preliminary examination of the transactions in SLPL for the period March 17 and July 14, 2005 thus led to the conclusion that the price movement of the shares was artificial and was designed to create a false market.

Table 5: Extent of cross deals between the two brokers in the shares of SLPL between March 17 and July 14, 2005

		Cross and Matched transactions
Sl.	Name of the broker	Ahilya Commercial	Shyam Lal Sultania
1	Ahilya Commercial	626000 (96%)	12800 (2%)
2	Shyam Lal Sultania	12800 (2%)	171100 (28%)

(significant percentages shown in bold)

Global Capital Markets Ltd. (GCML)

2.9 Global Capital Markets Ltd. (GCML) which is engaged in business of investment and finance is another listed company in CSE, showed a steep rise in price of the shares between June 2005 and September 2005. The company is also listed on the BSE. The share price of the company at CSE rose from Rs.1.25 to Rs.13.50 between June 17, 2005 and September 16, 2005 i.e. a price rise of 980% in a span of 3 months. The company filed its financial results to the CSE only upto the period March 2004. The company recorded a net sales of Rs.45 lakh and a net profit of Rs.28 lakh for the financial year ended March 31, 2004. The company did not file any financial statements for the year ended March 2005 indicating scant interest on the part of the company in disclosing its financial results to the public. In the absence of any details about the financial performance of the company to the investors for 2004-05 and lackluster results in the previous years, the astronomical rise of 980% in the price of the shares between June 17, 2005 and September 16, 2005 appeared to be artificial and designed to create a false market.

2.10 Trading data for the said period at the CSE analyzed given in Table 6 revealed that only three brokers namely, M/s Sanju Kabra, M/s A V Shares and Stock Brokers Pvt. Ltd. and M/s Shivam Stock Broking contributed around 90.97% of the total turnover of the GCML’s shares.

Table 6: Turnover of the three Brokers in the shares of GCML

Sl.No	Member Name	Trading Data
Sl.No	Member Name	No. of Shares Bought	% to Total Buy	No. of Shares Sold	% to Total Sell	Total No. Of Shares	% to Total Buy & Sell
1	Sanju Kabra	1168910	66.30	355300	20.15	1524210	43.23
2	A V Shares & Stock Brokers Pvt Ltd.	100	0.01	1114200	63.20	1114300	31.60
3	Shivam Stock Broking Pvt. Ltd.	322940	18.32	246200	13.97	569140	16.14
	Total	1491950	84.63%	1715700	97.32	3207650	90.97

2.11 The trades executed by the three brokers were mostly as matched transactions and these brokers acted as counter party among themselves. The matched transactions executed by Sanju Kabra, A.V. Shares & Stock Brokers Pvt. Ltd. and Shivam Stock Broking constituted the major portion of trading in the shares of the company and were largely responsible for the price rise in the shares.

2.12 The preliminary examination of the transactions in GCML for the period June 17 and September 16, 2005 thus led to the conclusion that the price movement of the shares was artificial and was designed to create a false market.

Table 7: Extent of matched transactions between the three brokers in the shares of GCML between June 17 and September 16, 2005

		Cross and Matched transactions
Sl.	Name of the broker	Sanju Kabra	A V Shares & Stock Brokers Pvt Ltd.	Shivam Stock Broking
1	Sanju Kabra	----	894800 (58.7%)	568800 (37.3%)
2	A V Shares & Stock Brokers Pvt Ltd.	894800 (80.3%)	---	----
3	Shivam Stock Broking	568800 (99.94%)	----	----

(significant percentages shown in bold)

Bankam Investments Ltd. (BIL)

2.13 Bankam Investments Ltd. (BIL) which is engaged in the business of investment and finance is another listed companies at CSE, which had a steep price rise during the period of June, 2005 to September, 2005. The share price of the company rose from Rs.2.10 to Rs.16.85 between June 09 , 2005 to September 16, 2005 i.e. a price rise of 702% in a span of 3 months and 7 days. The company filed its financial results to the CSE only upto the period March 2004. It is observed from the financial statements filed by the company with the CSE for the years ended March 2004 that the company had no income and had incurred a net loss of Rs.11 lakh. During the earlier year (i.e. 2003) the company did not have any income. The paid up capital of the company is Rs.74 lakh. As in the previous three cases, the company has not filed any financial statements for the year ended March 2005 demonstrating that the company is having scant interest in disclosing its financial results to the investors. In the light of the poor performance of the company compounded by absence of any details about the financial performance of the company to the investors in the past two years, the astronomical rise in the price of 702% during June 9, 2005 to September 16, 2005 seems to be artificial and designed to create a false market.

2.14 An analysis of the trading data given in table 8 for the said period at the CSE revealed that only two brokers namely, Rajendra Prasad Shah and Badri Prasad and Sons have contributed most of the turnover of the BIL’s shares. The turnover contribution of these two brokers in the shares of BIL is given below:

Table 8: Turnover of the three Brokers in the shares of BIL

Sl.No	Member Name	Trading Data
Sl.No	Member Name	No. of Shares Bought	% to Total Buy	No. of Shares Sold	% to Total Sell	Total No. Of Shares	% to Total Buy & Sell
1	Rajendra Prasad Shah	93500	65.05	60000	41.74	153500	53.40
2	Badri Prasad & Sons	46500	32.35	83730	58.26	130230	45.30
	Total	140000	97.40%	143730	100.00	283730	98.70

2.15 The trades executed by the two brokers were mostly as cross deals (wherein the buying and selling broker is the same) and these brokers acted as counter party of their own transactions. The cross deals executed by Rajendra Prasad Shah and Badri Prasad & Sons constituted the major portion of trading in the shares of the company and were largely responsible for the price rise in the shares.

2.16 The preliminary examination of the transactions in BIL for the period June 9 and September 16, 2005 thus led to the conclusion that the price movement of the shares was artificial and was designed to create a false market.

Table 9: Extent of cross deals between the two brokers in the shares of BIL between June 9 and September 16, 2005

		Cross and Matched transactions
Sl.	Name of the broker	Rajendra Prasad Shah	Badri Prasad & Sons
1	Rajendra Prasad Shah	120000 (78.2%)	33500 (21.8)
2	Badri Prasad & Sons	33500 (25.7%)	93000 (71.4%)

(significant percentages shown in bold)

S T Services Ltd. (STSL)

2.17 S T Services Ltd. (STSL) ) is another finance and investment company, listed on the CSE whose share prices rose steeply during the period between March, 2005 and September, 2005. The company is also listed on ASE and JSE. The share price of the company rose from Rs.12.10 to Rs.96.50 between March 18, 2005 and September 16, 2005 i.e. a price rise of 698% in a span of 5 months and 28 days. The company filed its financial results to the CSE only upto the period March 2004. The financial statements filed by the company with the CSE for the years ended March 2004 revealed that the company had sales of Rs.39 lakh (Rs.88 lakh during 2003) and had incurred a net profit of only Rs.1 lakh (Rs.1 lakh profit in 2003). The paid up capital of the company is Rs.4.96 crore. Thus, the available information indicates that the financial performance of the company is poor. No data on shareholding pattern and promoter holdings is available. On top of it as in the earlier cases, the company has not filed any financial statements for the year ended March 2005 which indicates that the company is having scant interest in disclosing its financial results to the investors. In the light of the poor performance of the company compounded by the absence of any details about the financial performance of the company to the investors in the past two years, the astronomical rise in the price of 698% during March 18, 2005 to September 16, 2005 is artificial and designed to create a false market.

2.18 An analysis of the trading data given in table 10 for the said period at the CSE revealed that only two brokers, namely , Ram Mohan Sarda and S. Jhunjhunwala & Co. have contributed around 54% of the total turnover of the STSL’s shares. The turnover contribution of these two brokers in the shares of STSL is given below:

Table 10: The turnover of two brokers in the shares of STSL

Sl.No	Member Name	Trading Data
Sl.No	Member Name	No. of shares bought	% to Total Buy	No. of shares sold	% to Total Sell	Total no. of shares	% to Total Buy & Sell
1	Ram Mohan Sarda	736595	37.68	893500	45.70	1630095	41.69
2	S Jhunjhunwala & Co.	244305	12.50	231700	11.85	476005	12.17
	Total	980900	50.18%	1125200	57.55	2106100	53.86

2.19 The trades executed by the two brokers were mostly as cross deals (wherein the buying and selling broker is the same) and matched transactions. These brokers either acted as counter party of their own transactions or matched among themselves. The cross deals and matched transactions executed by Ram Mohan Sarda and S. Jhunjhunwala & Co. constituted the major portion of trading in the shares of the company and were largely responsible for the price rise in the shares.

2.20 The preliminary examination of the transactions in STSL for the period March 18 and September 16, 2005 thus led to the conclusion that the price movement of the shares was artificial and was designed to create a false market.

Table 11: Extent of cross deals and matched transactions between the two brokers in the shares of STSL between March 18 and September 16, 2005

		Cross and Matched transactions
Sl.	Name of the broker	Ram Mohan Sarda	S Jhunjhunwala & Co.
1	Ram Mohan Sarda	1232990 (75.63%)	174455 (10.7%)
2	S Jhunjhunwala & Co.	174455 (36.6%)	24000 (5%)

(significant percentages shown in bold)

Amluckie Investment Co. Ltd. (AIML)

2.21 Amluckie Investment Co. Ltd. (AIML) ) which is engaged in business of investment and finance is another listed company in CSE, showed a steep rise in price of the shares between April, 2005 and August, 2005. The share price of the company rose from Rs.95 to Rs.298.50 between April 1, 2005 and August 23, 2005 i.e. a price rise of 214% in a span of 4 months and 32 days. The company filed its financial results to the CSE only upto the period March 2004. The financial statement of March 2004 revealed that the company had sales of Rs.9 lakh (Rs.3 lakh during 2003) and had earned a net profit of Rs.3 lakh (Rs.1 lakh profit in 2003). The paid up capital of the company is Rs.20.16 crore. The EPS for the year 2004 works out to 0.01 and at a market price of Rs.298.50, the P/E ratio works out to 29850. The company has not declared any dividend during the past 3 years. Thus, the available information indicates that the financial performance of the company is far from encouraging and the share price is not justified by the fundamentals of the company. The company has not filed any financial statements for the year ended March 2005 which indicates that the company has very little interest in disclosing its financial results to the investors. In the absence of any details about the financial performance of the company to the investors in the past two years, the astronomical rise in the price of 698% during April 1, 2005 to August 23, 2005 seems to be artificial and designed to create a false market.

2.22 Trading data for the said period at the CSE analyzed given in Table 12 revealed that only two brokers, namely, Shyam Lal Sultania and M. Bhiwaniwala & Co. have contributed around 39.43% of the total turnover of the AICL shares. The turnover contribution of these two brokers in the shares of AICL is given below:

Table 12: Turnover of the two Brokers in the shares of AICL

Sl. No	Member Name	Trading Data
Sl. No	Member Name	Buy	% to Total Buy	Sell	% to Total Sell	Total	% to Total Buy & Sell
1	Shyam Lal Sultania	567900	30.41	247300	13.24	815200	21.83
2	M Bhiwaniwala & Co	214999	11.51	442300	23.69	657299	17.60
	Total	782899	41.92%	689600	36.93	1472499	39.43

2.23 The trades executed by the two brokers were mostly as matched transactions and these brokers acted as counter party among themselves. The matched transactions executed by Shyamlal Sultania and M Bhiwaniwala & Co. constituted the major portion of trading in the shares of the company and were largely responsible for the price rise in the shares.

2.24 The preliminary examination of the transactions in AICL for the period April 1, 2005 and August 23, 2005 thus led to the conclusion that the price movement of the shares was artificial and was designed to create a false market.

Table 13: Extent of matched transactions between the two brokers in the shares of AICL between April 1, 2005 to August 23, 2005

		Cross and Matched transactions
Sl.	Name of the broker	Shyam Lal Sultania	M Bhiwaniwala & Co
1	Shyam Lal Sultania	92600 (11.3%)	543100 (66.6%)
2	M Bhiwaniwala & Co	543100 (82.6%)	11000 (1.6%)

(significant percentages shown in bold)

3. SUMMARY OF THE FINDINGS

3.1 The facts brought out in the foregoing paragraphs and the analysis of the trade and order log as given in the tables above led to the following findings –

a) The concerned brokers had followed an identical modus operandi, indulged either in cross deals and/or matched transactions, to artificially raise the prices and to create a false market in the shares of the six companies which were fundamentally weak. Significant number of trades in the selected shares of the above brokers during the period under scrutiny are apparently client to client trades which have been executed on a single terminal of the same broker, acting as counter party, successively at a higher price thereby jacking up the price.

b) These brokers also allowed clients, as well as themselves acted as clients, and placed simultaneously both buy and sale orders of same quantity at the same price in the selected shares to facilitate matching of transactions and create volume. The buy and sale orders were executed almost at the same time or within a gap of few seconds either between the said brokers among themselves in identical quantities and rates or through cross-deals.

c) These matched and cross deals, resulted in significant rise in the prices of shares of above mentioned six companies ranging from 200% to 1900%.

d) The artificial rise in the prices of the shares and creation of a false market in the shares also resulted into gains to some set of brokers and loss to other set brokers, which may be instrumental in legitimizing certain financial gains.

e) As the price of the above shares have gone up significantly there was a possibility that investors without having proper information about the concerned companies may be lured to these illiquid shares and may get trapped in the process, which is highly detrimental to the interest of the investors.

3.2 In sum, it was evident from the above analysis of the six companies, all of which are listed in CSE, and one of which is listed also in BSE, and another listed additionally in Jaipur and Ahmedabad Stock Exchanges that the brokers followed a common modus operandi to artificially jack up the price and create false volumes through continuous self deals executed on the same terminal and cross deals amongst themselves, thereby not only enriching themselves but also aiding and abetting the process of legitimizing the gains. The high prices were fictitious as the companies themselves recorded poor or negative financial performance and demonstrated scant interest in filing of up-to-date financial statements with CSE. Such acts by the brokers pose a serious risk to the stability and settlement system of the stock exchange besides raising the spectre that innocent investors may get drawn by the artificial trading volumes generated by these brokers and may in the process be beguiled into investing in the shares of these
fundamentally weak companies at unjustifiable market prices, only to be left adrift.

3.3 The findings of the preliminary inquiry as detailed above also established a prima facie case of violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003 and Regulation 7 of SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 read with code of conduct as specified in Scheduled II of the said Regulations. There was therefore a reasonable ground to believe that the transactions in the above securities are being dealt in a manner detrimental to the investors and securities market.

4 AD INTERIM EX-PARTE ORDER

4.1 While SEBI began formal investigation in the matter, SEBI in view of the aforesaid facts and circumstances, passed ad interim ex-parte order dated September 29, 2005 under Section 19 read with Section 11 (4) (a), 11(4)(b) and Section 11 (1) and 11 B of the SEBI Act to the effect that:

A) The following eleven stock brokers of CSE were directed not to buy, sell or deal in securities, in any manner, either directly or indirectly, until further directions:

1. Sanju Kabra

2. Shivam Stock Broking Pvt. Ltd.

3. D B & Co.

4. Rajendra Prasad Shah

5. Badri Prasad & Sons

6. M Bhiwaniwala & Co.

7. Ram Mohan Sarda

8. A V Shares & Stock Brokers Pvt. Ltd.

9. Shyam Lal Sultania

10. Ahilya Commercial Pvt. Ltd.

11. S Jhunjhunwala & Co.

B) The trading in the following companies was suspended until further directions

1. Prime Capital Market Ltd.

2. Subh Laxmi Projects Ltd.

3. Global Capital Market Ltd.

4. Bankam Investments Ltd.

5. S. T. Services Ltd.

6. Amluckie Investment Co.

5. RESPONSE OF THE ENTITIES PURSUANT TO THE INTERIM ORDER

Pursuant to the interim order passed on September 29, 2005 the above entities / brokers submitted their responses vide their various letters, which have been deliberated in subsequent part of the order:

6. PERSONAL HEARING

As requested by the entities and in adherence to the principles of natural justice, personal hearing was granted to the above entities / brokers on December 9, 2005. In the course of hearing all of them made oral submissions and as requested by them, they were given time to file their written submissions also.

7. SUBMISSIONS

The gist of the submissions made by the entities / brokers pursuant to the interim Order, during the personal hearing and in their written submissions can be broadly summarized as under:

7.1 Prime Capital Markets Ltd

In its pre and post hearing written submissions dated October 08, 2005 and December 12, 2005, the entity has submitted as under:

a) It has filed the financial statements with CSE as well as other relevant documents pertaining to various listing requirements.

b) The quarterly results and notices were also published in newspapers.

c) No investor complaints have been received by the exchanges against the entity.

d) The brokers D.B & Co, Sanju Kabra and Shivam Stock Broking are not related to the promoters of the entity.

e) It has complied with all the listing requirements of the exchange.

During the course of hearing, the entity stated that it has filed all the relevant financial statements with the CSE and produced copies of the filings duly acknowledged by the exchange along with copies of press clippings of the financial statements in support of their submission. The documents submitted by the entity were forwarded to CSE for their comments. The exchange has vide their letter dated December 19, 2005 stated as under:

“After re-verification of the records, we could locate un-audited quarterly results for the year 2002-2003 (1^st and 2^nd quarters), 2004-2005 (1^st quarter) and 2005-2006 (2^nd quarter). The copies of the said documents are enclosed. However, the compliances by the company of the un-audited financial results for the year 2002-2003 (3^rd and 4^th quarter), 2003-04 (4^th quarter) and 2004-2005 (4^th quarter) could not be located from the records of the Exchange. However, considering the record of compliance by the company for other quarters it is possible that the company might have submitted similar un-audited quarterly results for the year 2002-2003 (3^rd and 4^th quarter), 2003-2004 (4^th quarter), 2004-2005 (4^th quarter) also, which might have been misplaced in our office”.

I have also taken note that the above company is in the list of vanishing companies which has been brought to the notice of the general public by the Ministry of Company Affairs vide its public notice dated October 14, 2005.

7.2 Global Capital Market Ltd

In its pre and post hearing written submissions dated October 11, 2005 and December 12, 2005, the entity has submitted as under:

a) Neither the entity nor its promoters /directors / officers had any role to play in the alleged steep rise in the price of the scrip of the entity.

b) The entity has complied with Clause 41 of the listing agreement with BSE and CSE up to June 2005.

c) It has filed the financial statements with CSE as well as other relevant documents pertaining to various listing requirements.

d) The requirements of Clause 41 are available in BSE website and the EADFIR data is available on SEBI website.

e) The financial results have also been published in newspapers.

f) The income increased by 53.08% and profit before tax improved by 41.24% as on 31.3.2005.

g) Neither the company nor the promoters /directors / officers have any connection with any of the brokers i.e., Sanju Kabra, AV Stock Broking and Shivam Stock Broking.

The documents submitted by the entity were forwarded to CSE for their comments. The exchange has vide their letter dated December 19, 2005 stated as under:

“We could not locate un-audited quarterly financial results for the year 2002-2003 (1^st to 3^rd quarters) from the records of the Exchange but considering the record of compliance by the company for other quarters it is possible that the company might have submitted similar un-audited quarterly results for the year 2002-2003 (1^st to 3^rd quarters) also, which might have been misplaced in our office”.

7.3 Bankam Investments Ltd

In its pre and post hearing written submissions dated October 19, 2005 and December 12, 2005, the entity has submitted as under:

a) The entity has nothing to do regarding the price escalation in its shares.

b) The trading has been done on a recognized stock exchange and by stock brokers who are SEBI registered. Under the present share market operation, equity shares are traded in electronically in dematerialized form. The entity has no role in the movement of share prices.

c) The entity has accepted that it has not filed quarterly financial returns with CSE from 2002-03 till date.

During the course of hearing, the entity admitted that it has not filed all the relevant financial statements with the Calcutta Stock Exchange for the last five years. It is observed that the entity has filed the Balance Sheet for the year 2004-05 on November 10, 2005, i.e. after the date of the interim Order. The entity was asked to produce proof of filings of the financial statements, etc. with the exchange to SEBI by December 16, 2005.

However, the company could not produce the same. CSE vide its letter dated December 19, 2005 has confirmed that the entity has not filed un-audited quarterly financial result for the year 2002-2003 (all quarters), 2003-2004 (all quarters), 2004-2005 (all quarters and 2005-2006) (1^st and 2^nd quarters) with them.

7.4 Subh Laxmi Projects Ltd.

In its pre and post hearing written submissions dated Nil received on October 10, 2005 and letter dated December 09, 2005 and December 13, 2005, the entity has submitted as under:

a) The share price was within the cap fixed by the surveillance department of CSE.

b) Unaudited result of the entity for June 04, September 04, December 04, March 05, and June , 05 submitted to the CSE

c) The entity has filed the relevant documents to CSE pertaining to various listing requirements.

d) No investor complaints received by the exchanges against the entity

e) The brokers namely Shyamlal Sultania and Ahilya Commercial are not connected to the promoters of the entity.

During the course of hearing, the entity stated that it has filed all the relevant financial statements with the CSE. The entity was asked to produce proof of filings of the financial statements with the exchange to SEBI by December 16, 2005. The documents submitted by the entity regarding filing of un-audited quarterly results for the years 2002-03 (all quarters), 2003-04 (all quarters), 2004-05 (All quarters) and 2005-06 (1^st & 2^nd quarter) were forwarded to CSE for their comments. The exchange has vide their letter dated December 19, 2005 stated that they could not locate the submission of the said documents made by the entity with them.

7.5 S T Services Ltd.

In its pre and post hearing written submissions dated October 08, 2005 and December 15, 2005, the entity has submitted as under:

a) Quarterly results for June 2005 was filed with CSE on 29.7.05

b) The entity has filed the relevant documents to CSE pertaining to various listing requirements.

c) Turnover of the entity during 2004 is Rs.198.17 lakhs and during the year 2002-03 is Rs.183.28 lakhs.

d) Quarterly distribution of share holding for the quarter ended June 2005 has been filed with the exchange.

e) The entity is regularly publishing its financial results in two widely published newspapers.

f) Under the present share market operation, equity shares are traded electronically in dematerialized form. The entity has no role in the movement of share prices.

g) Ram Mohan Sarda and S Jhunjhunwala, the brokers who have actively traded in the shares of the company are not connected with the promoters of the entity.

During the course of hearing, the entity stated that it has filed all the relevant financial statements with the CSE and produced copies of the filings duly acknowledged by the exchange. The documents submitted by the entity were forwarded to CSE for their comments. The exchange has vide their letter dated December 19, 2005 stated as under:

i) “The Exchange after re-verification could locate the un-audited quarterly results for the year 2005-2006 (1^st and 2^nd quarter) from the records of the Exchange. The copies of the said disclosures are enclosed. However, the un-audited quarterly results for the year 2002-2003 (1^st, 2^nd and 4^th quarter), 2003-2004 (1^st and 2^nd quarter) and 2004-2005 (4^th quarter) could not be located from the records of the Exchange but considering the record of compliance by the company for other quarters it is possible that the company might have submitted similar un-audited quarterly financial results for the year 2002-2003 (1^st, 2^nd and 4^th quarter), 2003-2004 (1^st and 2^nd quarter) and 2004-2005 (4^th quarter) also which might have been misplaced in our office.

ii) The Exchange after re-verification could locate the shareholding pattern for the year 2003-2004 (2^nd quarter), 2004-2005 (4^th quarter) and 2005-2006 (2^nd quarter) from the records of the Exchange. The copies of the said documents are enclosed. However, the shareholding pattern for the year 2002-2003 (1^st and 2^nd quarter), 2003-2004 (3^rd quarter) and 2004-2005 (2^nd quarter) could not be located from the records of the Exchange but considering record of compliance by the company for other quarters it is possible that the company might have submitted the shareholding pattern for the year 2002-2003 (1^st and 2^nd quarter), 2003-2004 (3^rd quarter), 2004-2005 (2^nd quarter) also, which might have been misplaced in our office”.

7.6 Amluckie Investment Co.

In its pre and post hearing written submissions dated October 08, 2005 and December 10, 2005, the entity has submitted as under:

a) The movement of share price is in line with BSE small cap scrips during the period.

b) Quarterly results have been submitted to the exchange.

c) Results and notices were published in newspapers since last 2 years.

d) It has been erroneously stated that the entity has sales of Rs 9 lacs for the year ended 2004 and Rs 3 lacs for year ended March 2003. According to the audited balance sheet submitted to the exchange, the entity had sales of Rs. 326.07 lacs in 2003-04 and Rs. 814.67 in 2002-03.

e) The entity has complied with all listing requirements of the exchange.

f) No investor complaint has been received by the exchange against the entity.

g) % age of delivery over volume of trades would establish the fact that the price rise in securities of the company is not a result of speculation or creation of artificial volume.

h) As the entity has been regular in publishing its financial results and all other information submitted to the exchange, there is no question of an investor taking un-informed decision to deal in the shares of the entity.

i) The order was passed on the basis of information gathered from Capitaline database, which is a private organization and has obtained the information about the entity from its own sources. The entity has stated that Captaline is not a statutory authority and they are not required statutorily to submit the financial information with them.

j) The address of the company was changed w.e.f. August 5, 2003 which was intimated to the exchange vide their letter darted September 8, 2003.

k) The entity has referred the case of UBS Securities Asia Ltd. where Hon’ble SAT held that: “The impugned order only speaks of some delay and non-furnishing of information on the part of the appellant. Instead of invoking the provisions of Section 11B and Section 11(4), we find Section 15A could have handled the instant case more appropriately when there is an exact provision for handling delays in the submissions of information”.

l) In some cases SEBI has not suspended trading in the shares of the company whose share prices were manipulated, viz. IND-TRA-DECO Ltd., Mega Corporation Ltd., Eltrol Ltd. and IFSL Ltd.

During the course of hearing, the entity stated that it has filed all the relevant financial statements with the CSE and produced copies of the filings duly acknowledged by the exchange. The documents submitted by the entity were forwarded to CSE for their comments. The exchange has vide their letter dated December 19, 2005 stated as under:

“The Exchange could not locate the un-audited quarterly results for the year 2002-2003 (1^st, 2^nd and 3^rd quarter), 2003-2004 (2^nd quarter), 2004-2005 (4^th quarter) from the records of the Exchange. However, considering the record of compliance by the company for other quarters, it is possible that the company might have submitted similar un-audited financial results for the year 2002-2003 (1^st, 2^nd and 3^rd quarter), 2003-2004 (2^nd quarter), 2004-2005 (4^th quarter) also, which might have been misplaced in our office”.

7.7 Sanju Kabra

In its pre and post hearing written submissions dated October 14, 2005 and December 8, 2005, the broker has submitted as under:

a) The price and volume in the scrip Prime Capital Markets Ltd. had already increased when they commenced trading.

b) They could have been prohibited dealing in that specific scrip, as has been done in the case of other brokers in BSE and NSE.

c) As per FUTP Regulation, 2003 investigating officer needs to be appointed to take such action. In such case, no investigating officer has been appointed by SEBI and no interim/final order is available with SEBI.

d) Section 11(1) or 11(B) of SEBI Act is not applicable in the said case.

e) The broker has no link or connection with company promoters/ directors.

f) The broker has earned legitimate brokerage and if at all anybody is benefited it is the client.

g) No proprietary trade has been done by them.

h) The broker collects upfront margin from the clients.

i) No investor complaints are pending against the broker.

j) No action has been taken against the broker by any regulatory authority including SEBI.

During the course of hearing, the broker admitted that they have executed trades on behalf of their clients. The broker further stated that he has not done any self deals and since there were only few active brokers at CSE, the trades had got executed with them.

7.8 Shivam Stock Broking Pvt. Ltd.

In its pre and post hearing written submissions dated October 14, 2005 and December 8, 2005, the broker has submitted as under:

a) The price and volume in the scrip, Prime Capital Markets Ltd. had already increased when they commenced trading.

b) The broker could have been prohibited dealing in that specific scrip (GCML & PCML) as has been done in the case of other brokers in BSE and NSE.

d) Section 11(1) or 11(B) of SEBI Act is not applicable in the said case.

e) The broker has no link or connection with company promoters/ directors.

f) The broker has earned legitimate brokerage and if at all anybody is benefited it is the client.

g) No proprietary trade has been done by the broker.

h) The broker collects upfront margin from the clients.

i) No investor complaints are pending against the broker.

j) No action has been taken against the broker by any regulatory authority including SEBI.

7.9 D B & Co.

In its pre and post hearing written submissions dated October 04, 2005 and December 15, 2005, the broker has submitted as under:

a) The broker has done the first transaction in Prime Capital Market Limited on 08.07.2005 @ Rs.229/-.

b) The broker has never allowed same or even related clients to place the buy and sell order simultaneously to create artificial volumes.

c) They have not made any gain other than the brokerage from the said transactions.

d) No complaint has been made till date against Prime Capital Markets Ltd or against them.

During the course of hearing, the broker stated that they have executed trades on behalf of their clients. The broker has also admitted that in the absence of any work in the exchange he had agreed to execute such trades on behalf of his clients, who were not known to him previously.

7.10 Rajendra Prasad Shah

In its pre and post hearing written submissions dated October 12, 2005 and December 14, 2005, the broker has submitted as under:

a) They have traded within a price range of Rs. 2.10 and Rs. 5.75 in Bankam Investment Ltd. During the period 9/9/05 to 16/9/05 when the price has gone up from Rs.5.78 to Rs.16.85 they have not traded in the said scrip.

b) Their trades were spread over 64 days when the price increased from Rs.2.10 to Rs.5.75 making an average of 6 paisa in a day

c) The broker has executed all the transactions after following relevant SEBI guidelines and after filling up know your client form, and allotted a unique client code.

d) They have followed the directives of SEBI and also the provisions of the Code of Conduct for Stock Brokers while carrying the on the said trades.

e) They have not made any gain other than the brokerage from the said transactions.

f) No investor complaints are pending against the broker.

During the course of hearing, the broker stated that they have executed trades on behalf of their clients. The broker further stated that since there are only few active brokers at CSE, the trades have got executed with them. Regarding cross deals, i.e. both buying and selling from its same terminal, the broker admitted that such transactions are the prevalent practice at CSE and all the brokers are doing it as there is no other work in the exchange.

7.11 Badri Prasad & Sons

In its pre and post hearing written submissions dated October 13, 2005 and December 12, 2005, the broker has submitted as under:

a) There was no jacking up the price by them as they had obtained a separate declaration from each client stating that the clients don’t have any link directly or indirectly with the promoter of the company and also that they are nowhere involved with the increase or decrease in the prices of shares dealt in by them through me.

b) The saudas done by them are on behalf of their clients during the period over 51 working days. The price increase during this period was from Rs.2.25 to Rs.16.85 making it an average increase of 29 paisa per working day.

c) They have not paid, offered or agreed to pay or offer directly or indirectly any money to any person for dealing in any security with the object of inflating, depressing, maintaining or causing fluctuations in the price of such security.

d) They have filled up the know your client form and all clients were allotted a unique client code

e) No investor complaints are pending against them.

7.12 M Bhiwaniwala & Co.

In its pre and post hearing written submissions dated October 14, 2005, the broker has submitted as under:

a) They have not allowed the same client or even related clients to place buy and sale order simultaneously to create artificial volume.

b) There has been no delay or default in pay-in/pay-out.

c) All transactions are delivery based and were settled through actual delivery.

d) They have not derived any financial gain out of these deals except for income from brokerage.

7.13 Ram Mohan Sarda

In its pre and post hearing written submissions dated October 13, 2005, the broker has submitted as under:

a) Whatever sauda has been done by them have been done on behalf of client during the period over 126 working days. The price increase during this period was from Rs.12.10 to Rs.96.50 making it an average increase of 67 paisa per working day.

b) Separate declaration form has been obtained from their clients that they don’t have link directly or indirectly with the promoters/directors of the company.

c) Obtained know your client forms and allotted unique client code from each clients before executing any trades.

7.14 A V Shares & Stock Brokers Pvt. Ltd.

In its pre and post hearing written submissions dated October 01, 2005 and October 24, 2005 the broker has submitted as under:

a) All transactions were online transactions through Calcutta Stock Exchange and they had no opportunity of knowing who the buyers or sellers were and who their brokers were.

b) They were not a party to the rise in the price to the question of 980% as mentioned in the interim order.

c) They have traded in the scrip (GCML) within a price range of Rs.1.30 to Rs.2.80.

During the course of hearing, the broker stated that they have executed only sale orders for its client Salasar Stock Broking, which is also a CSE member. The broker denied having any knowledge about the buyers of these shares and stated that they have not entered into any cross deals. The broker admitted that he has entered the trades into the system and had no knowledge about the buying member.

7.15 Shyam Lal Sultania

In its pre and post hearing written submissions dated October 10, 2005, the broker has submitted as under:

a) During the period 1/4/05 to 13/5/05 they have traded only in 6 occasions with a volume of 14400 shares. During this period the share prices has gone up from Rs 95/- to Rs. 155/-

b) At present there are only 30 to 35 active brokers in CSE. So it is natural that all the trades are between these brokers only and it is not because of any cross or matched deal.

c) No investor complaints are pending against them.

d) They have not made any gain other than the brokerage from the said transactions.

7.16 Ahilya Commercial Pvt. Ltd.

In its pre and post hearing written submissions dated October 08, 2005, the broker has submitted as under:

a) They have transacted a quantity of 21500 shares from 21.3.2005 to 3.6.2005 in the scrip of Subh Laxmi Projects Limited. Between 4.5.2005 to 13.5.2005 they have transacted at lower prices as compared to the closing prices and as such they had no pre-conceived idea of rigging up / manipulating the prices artificially.

b) Their active participation started at their client’s request from 6.6.05 when the market price was Rs.219.50 and after that the increase in prices are hardly 13% approximately instead of alleged 1067%.

c) Also stated that their average turnover on all these dates was around 13% approximately. Hence, the alleged involvement of their firm in price manipulation is without any basis.

d) If cross deals take place in trade terminal at the prevailing market price, then there is no illegality in executing the transactions.

e) There has been no delay or default in pay-in or pay-out.

f) They have not allowed any client or even related clients to place simultaneous buy and sell.

g) All the transactions in the said scrip were delivery based and were settled through actual delivery.

7.17 S Jhunjhunwala & Co.

In its pre and post hearing written submissions dated October 10, 2005, the broker has submitted as under:

a) They have placed all the orders in the electronic trading mechanism of the stock exchange purely on behalf of their clients without any malpractice & intention of creating artificial price and volume in the scrip of ST Services Limited. All the transactions have been effected from placement of orders in the ordinary course of business in the screen based online trading system.

b) All the trades were done by them during the period March 2005 to September 2005 on instruction of their clients and they have acted in the capacity of broker only.

c) They have filled up the know your client forms and all clients were allotted a unique client code.

d) All the transactions made by them in ST Services Limited resulted in actual delivery of shares and no transaction was squared off. Thereby they are not a party to artificial price and alleged creation of false market.

The broker stated that they have executed trades on behalf of their clients. Further, they have mentioned they had only few trades during the period when the price of the scrip, viz. S T Services Ltd., ranged between Rs.16.55 to 19.20 and their maximum trades were executed in August – September 2005 when the price of the scrip, viz. S T Services Ltd., ranged between Rs.91.60 to Rs.96.50.

During the course of hearing, the broker stated that they have executed trades on behalf of their clients. All the transactions have been effected from placement of orders in the ordinary course of business in the screen based online trading system. The broker admitted that since there were only few active brokers at CSE, the trades had got executed with them.

8. CONSIDERATION OF ISSUES AND FINDINGS:

8.1 Having carefully considered the facts of the case, the responses received pursuant to the interim orders, oral as well as written submissions made on behalf of the entities / brokers mentioned above, now I proceed to deal with the issues as under:

8.2 Companies :

The companies have poor financial track record and have price rise which is not supported by the financial performance of the company. Examination of the material on record including the oral and written submissions of the companies reveals the following extenuating factors : -

The companies Global Capital Market Ltd., Amluckie Investments Ltd., S.T. Services Ltd., Prime Capital Market Ltd. and Subh Laxmi Projects Ltd. had produced copies of the filings of financial statements duly acknowledged by the Calcutta Stock Exchange which were sent to the exchange for confirmation.

The exchange vide its letter dated December 19, 2005 stated that :-

· The un-audited quarterly results for the year 2002-2003 (1^st to 3^rd quarters) of Global Capital Market Ltd. could not be located from the records of the Exchange.

· The un-audited quarterly results for the year 2002-2003 (1st, 2nd and 3rd quarter), 2003-2004 (2nd quarter) and 2004-2005 (4th quarter) of Amluckie Investments Ltd., could not be located from the records of the Exchange.

· The un-audited quarterly results for the year 2002-2003 (1st, 2nd and 4th quarter), 2003-2004 (1st and 2nd quarter) and 2004-2005 (4th quarter) and share holding pattern for the year 2002-2003 (1st and 2nd quarter), 2003-2004 (3rd quarter), 2004-2005 (2nd quarter) of S.T. Services Ltd., could not be located from the records of the Exchange.

· The un-audited quarterly results for the year 2002-2003 (3rd and 4th quarter), 2003-2004 (4th quarter), 2004-2005 (4th quarter) of Prime Capital Market Ltd., could not be located from the records of the Exchange.

The exchange further stated that however considering the record of compliance by the above four companies it is possible that the companies might have submitted the said documents with them, which might have been misplaced in the exchange. Considering the said written reply dated December 19, 2005, submitted by the exchange, I am inclined to give benefit of doubt to the above four companies in the matter of filings with CSE.

I note that Prime Capital Ltd., figure in the list of vanishing companies publicly notified by the Ministry of Company Affairs on October 14, 2005.

It is surprising that the exchange has vide its letter dated December 19, 2005 stated that considering the record of compliance by Prime Capital Market Ltd., it is possible that the entity might have submitted the relevant financial documents with them, which might have been misplaced in the exchange. This reply of the CSE is a matter of serious concern that a first level regulator like the CSE does not maintain important records and documents properly, even in the case of a vanishing company.

In respect of Subh Laxmi Projects Ltd., although the company stated it had filed the relevant financial statements with the exchange, I note that unlike in the matter of other companies, CSE did not indicate the possibility of submission of the said documents by the company with them.

I note that Bankam Investments Ltd. admitted that it has not filed financial statements such as quarterly results, etc., with the exchange for the last five years.

I also note that CSE vide notice dated December 23, 2005 has suspended trading in the shares of Global Capital Market Ltd., Amluckie Investments Ltd., S.T. Services Ltd., Prime Capital Market Ltd. Subh Laxmi Projects Ltd. and Bankam Investments Ltd. for non-compliance of various clauses of listing agreement.

However, it is a matter of some concern that a first level regulator like the CSE does not maintain important records and documents properly.

8.3 Brokers:

A) Sanju Kabra

Taking into account the material on record including the oral and written submissions of the broker, I conclude that the broker has not brought out any fresh material to rebut the findings made in the interim order.

The broker could not give satisfactory reply to the queries raised during hearing as to how the brokers considerable percentage of transactions, as detailed under “preliminary findings” in this order, are cross deals where either the buying and selling clients approached the broker and the broker has entered the transactions in his own terminal at the same price and quantity within a gap of a few seconds, or the broker has entered matching transactions with specific counterparty broker. Such matching of transactions is not possible without prior understanding between the two parties. As such, the plea of innocence is not open to the broker, as he was fully aware of the goings on in the market.

The trades by the broker constituted a significant percentage of the volumes in the said shares of the company at the exchange during the period when there was unusual price rise in the shares of the company which has poor financial track records, thereby not only enriching himself but also aiding and abetting the process of legitimizing the gains.

The broker has argued during the hearing that he had no self deals (both buy and sale in his same terminal) in the scrip Global Capital Markets Ltd. However, it is observed that he has significant volume of matching transactions with only two brokers, i.e. A V Shares & Stock Brokers Ltd. (59%) and Shivam Stock Broking P. Ltd. (37%). Further, in the scrip Prime Capital Markets Ltd., it is observed that the broker has entered transactions which have been matched in his own system to the tune of 29% along with matching transactions with Shivam Stock Broking P. Ltd. (68%). The fact that the broker has executed significant percentage of matching transactions with Shivam Stock Broking P. Ltd. in the shares of both the companies, namely, Prime Capital Markets Ltd. and Global Capital Markets Ltd., is sufficient proof of a prior understanding between the two parties.

It, therefore, cannot be accepted that the broker had acted in good faith and with due diligence before considering of trading for their clients. The registration granted by SEBI to a broker attaches responsibility upon the said broker to act diligently and in accordance with applicable rules and regulations and sound market practices. A broker has also an obligation to carry out its business in a manner so that safety and integrity of the market may be maintained.

I therefore find no extenuating factor to take a lenient view in the matter and I am of the considered opinion that the broker has not been diligent and careful while soliciting new clients and entering into such transactions and as such has violated the sacrosanct provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003 and Regulation 7 of SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 read with code of conduct as specified in Scheduled II of the said Regulations.

B) Shivam Stock Broking Pvt. Ltd.

The broker has argued during the hearing that he had no self deals (both buy and sale in his same terminal) in the scrip Global Capital Markets Ltd. However, it is observed that nearly all its trades are matching transactions with only one broker, i.e. Sanju Kabra (99.94%). Further, in the scrip Prime Capital Markets Ltd., it is observed that the broker has entered transactions which have been matched in its own system to the tune of 3% along with matching transactions again with Sanju Kabra (96.28). The fact that in the shares of both the companies namely Prime Capital Markets Ltd. and Global Capital Markets Ltd., nearly all the trades of the broker are matched with Sanju Kabra is sufficient proof of a prior understanding between the two parties.

C) D B & Co.

The trades by the broker constituted a significant percentage of the volumes in the shares of Prime Capital Markets Ltd. at the exchange during the period when there was unusual price rise in the shares of the company which has poor financial track records, thereby not only enriching himself but also aiding and abetting the process of legitimizing the gains.

It is observed that nearly all the trades of the broker have been matched in its own system (99.56%) and have been executed on behalf of new clients. It, therefore, cannot be accepted that the broker had acted in good faith and with due diligence before considering of trading for its clients. The registration granted by SEBI to a broker attaches responsibility upon the said broker to act diligently and in accordance with applicable rules and regulations and sound market practices. A broker has also an obligation to carry out its business in a manner so that safety and integrity of the market may be maintained.

D) Rajendra Prasad Shah

The trades by the broker constituted a significant percentage of the volumes in the shares of Bankam Investments Ltd. at the exchange during the period when there was unusual price rise in the shares of the company which has poor financial track records, thereby not only enriching himself but also aiding and abetting the process of legitimizing the gains.

The fact that 78% of the trades of the broker in the shares of Bankam Investments Ltd. have been matched in his own system while the remaining 22% are matching transactions with only one broker, viz. Badri Prasad & Sons is sufficient evident that there was prior understanding between the two parties.

E) Badri Prasad & Sons

The trades by the broker constituted a significant percentage of the volumes in the shares of the Bankam Investments Ltd., at the exchange during the period when there was unusual price rise in the shares of the company which has poor financial track records, thereby not only enriching himself but also aiding and abetting the process of legitimizing the gains.

The fact that 72% of the trades of the broker in the shares of Bankam Investments Ltd., have been matched in his own system while 26% are matching transactions with only one broker, viz. Rajendra Prasad Shah is sufficient evident that there was prior understanding between the two parties.

F) M Bhiwaniwala & Co.

The trades by the broker constituted a significant percentage of the volumes in the shares of the Amluckie Investment Co. Ltd., at the exchange during the period when there was unusual price rise in the shares of the company which has poor financial track records, thereby not only enriching himself but also aiding and abetting the process of legitimizing the gains.

The fact that 2% of the trades of the broker have been matched in his own system while 83% of the trades of the broker are matching transactions with only one broker, viz. Shyam Lal Sultania is sufficient evident that there was prior understanding between the two parties.

G) Ram Mohan Sarda

The trades by the broker constituted a significant percentage of the volumes in the shares of the S.T. Services Ltd., at the exchange during the period when there was unusual price rise in the shares of the company which has poor financial track records, thereby not only enriching himself but also aiding and abetting the process of legitimizing the gains.

The fact that 76% of the trades of the broker have been matched in his own system while 11% are matching transactions with only one broker, viz. S. Jhunjhunwala is sufficient evident that there was prior understanding between the two parties.

H) A V Shares & Stock Brokers Pvt. Ltd.

Examination of the material on record including the oral and written submissions of the broker reveals the following extenuating factors:

1) The broker has stated that they have executed only sale orders for its client Salasar Stock Broking, which is also a CSE member.

2) Salasar Stock Broking instead of trading directly in its own name has used the broker to sell its shares.

3) The broker has traded in the scrip, viz. Global Capital Market Ltd. within a price range of Rs.1.30 to Rs.2.80.

4) It cannot be said to be a party in the rise in the price of the said scrip to the tune of 980%.

5) The broker has not executed any proprietary trades in the scrip.

Although the broker has only executed sale trades on behalf of one client and these trades were not found to be executed during the period when there was unusual price rise in the scrip, it has been found that the client for the broker’s transactions in the relevant scrip was another CSE broker namely Salasar Stock Broking and these transactions were matched with another CSE broker Sanju Kabra. In effect, the transactions between Salasar Stock broking and Sanju Kabra were matched through A.V. Shares & Stock Brokers Pvt. Ltd. The nature of such transactions need to be investigated thoroughly.

I) Shyam Lal Sultania

The trades by the broker constituted a significant percentage of the volumes in the shares of the Subh Laxmi Projects Ltd. and Amluckie Investments Ltd., at the exchange during the period when there was unusual price rise in the shares of the company which has poor financial track records, thereby not only enriching himself but also aiding and abetting the process of legitimizing the gains.

It is observed that 28% and 12% of the trades of the broker have been matched in his own system in the scrips Subh Laxmi Projects Ltd. and Amluckie Investments Ltd. respectively. Further, in the scrip Amluckie Investments Ltd., 67% of the trades of the broker are matching transactions with only one broker, viz. M. Bhiwaniwala & Co. which is sufficient evident that there was prior understanding between the two parties.

J) Ahilya Commercial Pvt. Ltd.

The trades by the broker constituted a significant percentage of the volumes in the shares of the Subh Laxmi Projects Ltd. at the exchange during the period when there was unusual price rise in the shares of the company which has poor financial track records, thereby not only enriching himself but also aiding and abetting the process of legitimizing the gains.

It is observed that nearly all the trades of the broker, i.e. 96% have been matched in his own system. It, therefore, cannot be accepted that the broker had acted in good faith and with due diligence before considering of trading for their clients. The registration granted by SEBI to a broker attaches responsibility upon the said broker to act diligently and in accordance with applicable rules and regulations and sound market practices. A broker has also an obligation to carry out its business in a manner so that safety and integrity of the market may be maintained.

K) S Jhunjhunwala & Co.

The fact that in the shares of S.T. Services Ltd., 5% of the trades of the broker were matched in his own system while 37% of the trades of the broker were matched transactions with only one broker, viz. Ram Mohan Sarda is sufficient evident that there was prior understanding between the two parties.

9. ORDER

9.1 Thus, on the conspectus of the facts and the material attendant circumstances, I, in exercise of powers conferred upon me by virtue of Section 19 read with Section 11 (4)(a), 11(4)(b) and Section 11(1) and 11B of SEBI Act issue further directions as under, pending investigation that :

A) The ex-parte interim order dated September 29, 2005, so far as they relate to the entity Bankam Investments Ltd., shall remain in force till further orders which SEBI may pass on conclusion of the investigation proceedings referred hereinabove.

B) Prime Capital Ltd., figure in the list of vanishing companies publicly notified by the Ministry of Company Affairs on October 14, 2005. It is surprising that the exchange has vide its letter dated December 19, 2005 stated that considering the record of compliance by Prime Capital Market Ltd. it is possible that the entity might have submitted the relevant financial documents with them, which might have been misplaced in the exchange. The reply submitted by the CSE causes concern that a first level regulator like the CSE does not maintain important records and documents properly, even in the case of a vanishing company. The exchange is hereby directed to re-check the compliance status of the above entity and submit its comments before the Regional Task Force.

The ex-parte interim order dated September 29, 2005, so far as they relate to the entity Prime Capital Market Ltd., shall remain in force till the deletion of the name of the entity from the list of vanishing companies as appeared in the Public Notice dated October 14, 2005 issued by the Ministry of Company Affairs.

C) With regards to Subh Laxmi Projects Ltd., it is noted that although the entity has stated that it has filed the relevant financial statements with the exchange, CSE, vide its letter dated December 19, 2005 has informed that they could not locate the submission of the said documents made by the entity with them and did not indicate the possibility of submission of the said documents by the company with them. In view of the same, I hereby direct CSE to immediately conduct a thorough investigation in the matter especially with respect to the veracity of receipt of the documents, pending which the ex-parte interim order dated September 29, 2005 so far as they relate to the said entity, viz. Subh Laxmi Projects Ltd., shall remain in force till further orders which SEBI may pass on conclusion of the investigation proceedings referred hereinabove.

D) Taking into consideration the proof of filing of financial statements duly acknowledged by CSE submitted by Global Capital Market Ltd., Amluckie Investments Ltd. and S.T Services Ltd. and CSE’s letter dated December 19, 2005 wherein the exchange has stated that it is possible, considering the record of compliance of these entities, that they have submitted the relevant financial statements which have been misplaced in the exchange, I am of the opinion that a lenient view may be taken in respect of these entities and in exercise of powers conferred in terms of Section 19 read with Section 11 and 11 B of SEBI Act, 1992, hereby direct that the proceedings against Global Capital Market Ltd., Amluckie Investments Ltd. and S.T Services Ltd. shall stand terminated and I vacate the ad-interim order dated September 29, 2005.

E) The directions in relation to the six companies as referred above are without prejudice to the actions by CSE and also without prejudice to the outcome of findings in investigation.

F) Having regard to the ground realities prevailing in CSE wherein a few illiquid scrips are being traded amongst a set of brokers employing same unfair trade practices which is giving rise to artificial market and fancy values to the scrips of companies with hardly any fundamentals and which has become the very staple of the market in CSE with all its attendant deleterious effects, I am persuaded to conclude that there is no parallel between the brokers of other stock exchanges and a clutch of brokers operating in CSE with a palpable adverse impact and for the same reason, the treatment will have to be demonstratively deterrent. The ex-parte interim order dated September 29, 2005 so far as they relate to the brokers, viz. Sanju Kabra, Shivam Stock Broking Pvt. Ltd., D. B. & Co., Rajendra Prasad Shah, Badri Prasad & Sons, M. Bhiwaniwala & Co., Ram Mohan Sarda, A.V. Shares & Stock Brokers Pvt. Ltd., Shyam Lal Sultania, Ahilya Commercial Pvt. Ltd. and S. Jhunjhunwala & Co., shall remain in force till further orders which SEBI may pass on conclusion of the investigation proceedings referred hereinabove.

G) On going through CSE’s letter dated December 19, 2005, I feel that it is a matter of concern that a first level regulator has not taken adequate care in the maintenance of important records and documents filed with it. CSE is directed to initiate suitable action for proper maintenance of records relating to listing requirements and is also advised to be more vigilant to avoid such occurrence in the future.

9.2 These directions shall come into force with immediate effect.

DATE :12-1-2006	MADHUKAR
PLACE : MUMBAI	WHOLE TIME MEMBER
	SECURITIES AND EXCHANGE BOARD OF INDIA