SHAREDEAL FINANCIAL CONSULTANTS PVT LTD Vs. CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA
LAWS(SB)-2003-5-8
SECURITIES APPELLATE TRIBUNAL
Decided on May 23,2003

Appellant
VERSUS
Respondents

JUDGEMENT

C.Achuthan, - (1.) THE present appeal is directed against the Respondent's order dated 16.9.2002. By the said order the Respondent suspended the certificate of registration granted to the Appellant, for a period of nine months from 1.10.2002 holding the Appellant guilty of violating clause A(2) of Schedule II of the Securities and Exchange Board of India (Stock Brokers and Sub Brokers) Regulations, 1992. THE Appellant is a member of the Bombay Stock Exchange (BSE).
(2.) The background in which the Respondent issued the impugned order, has been stated in the impugned order as follows: Market witnessed abnormal price and volume movement in the shares of Amara Raja Batteries Ltd (ARBL) traded on Bombay Stock Exchange (BSE)and National Stock Exchange (NSE), in February - March, 2001. The Respondent received complaints alleging market manipulation/ irregularities in the trading of ARBL's shares. In that context the Respondent ordered investigation to ascertain the role played by various persons/intermediaries, and violations, if any, of the regulatory provisions by them. The investigation is stated to have revealed that Shri Harinarayan Bajaj and his son Shri Rahul Bajaj were the dominant traders in the ARBL's shares during the period August 2000 to March 2001, that some of the members of BSE and NSE had aided and abetted Shri Harinarayan Bajaj in creating a false market in ARBL's scrips and also that they had failed to exercise due care and skill in their dealings. The Appellant was one of the members whose involvement in the matter was subjected to investigation. In the light of the information collected during the course of investigation, the Respondent decided to conduct a detailed enquiry into the role and conduct of the Appellant in trading in the scrip. Accordingly an enquiry officer was appointed on 18.6.2001 to enquire into the affairs of the Appellant in its dealings in the scrip of ARBL and the possible violations of the rules, bye laws and regulations of BSE, provisions of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (the FUTP Regulations) and the Securities and Exchange Board of India (Stock-brokers and Sub-brokers) Regulations, 1992 (the Stock Broker Regulations). The enquiry officer on concluding the enquiry came to the conclusion that the Appellant had failed to exercise due care and skill in its dealings with Shri Bajaj as required by clause A(2) of the code of conduct prescribed for the stock-brokers in the Stock Broker Regulations. He recommended 9 months' suspension of the certificate of registration granted to the Appellant. The Respondent communicated the findings of the enquiry officer to the Appellant and asked to show cause as to why the penalty as recommended by the enquiry officer should not be imposed against it. The Appellant responded to the same by filing written explanation and making oral submissions before the Respondent.(the Chairman) The Chairman adjudicated the show cause notice. Vide his order dated 16.9.2002 the certificate of registration granted to the Appellant was suspended for a period of 9 months from 1.10. 2002.
(3.) CLAIMING to be aggrieved by the said order, the Appellant has preferred the present appeal.;


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