AJMERA ASSOCIATES LTD. Vs. ADJUDICATING OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA
SECURITIES APPELLATE TRIBUNAL
Ajmera Associates Ltd.
Adjudicating Officer Securities And Exchange Board Of India
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N.K. Sodhi, J. (Presiding Officer) -
(1.) WHETHER the appellant, a stock broker, is guilty of aiding and abetting its clients to manipulate the price of the scrip of Highland Industries Ltd. (for short the company) and whether it failed to exercise due diligence in carrying out its "Know Your Client" obligations are the two questions which arise for our consideration in this appeal filed under Section 15T of the Securities and Exchange Board of India Act, 1992.
(2.) THE appellant is a member of the Bombay Stock Exchange and a registered stock broker with the Securities and Exchange Board of India (for short the Board). It executed trades in the scrip of the company on behalf of its client Prashant Narvekar. It is not in dispute that in all, the appellant traded for 22 days on behalf of its clients during the period of investigation which is from June 30, 2003 to September 26, 2003. Since the price of the scrip had risen enormously during the period of investigation, the Board carried out investigations and found that a number of clients namely Smt. Pravina C. The appellant filed its detailed reply denying the allegations. It was stated on behalf of the appellant that all the trades were executed in the ordinary course of its business and on the instructions of the client (Prashant Narvekar) and that all the trades were delivery based. It was also pleaded that during the relevant period the client traded through the appellant not only in the scrip of the company but also in 22 other scrips and the total turnover was more than Rs. 11 crores. The appellant also pleaded that it exercised due diligence while trading on behalf of the client and that all the basic documents that were required to be obtained from the client had been obtained before the trades were executed. Reference in this regard is made to the member client agreement, individual client registration application form, copy of the driving licence, copy of the ration card and a copy of the permanent account number which were all obtained before the appellant started executing the trades.
(3.) ON a consideration of the material collected during the course of the investigations and the enquiry conducted by the Adjudicating Officer, he came to the conclusion that both the charges leveled against the appellant stood established and by his;
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