Case: 1. SEBI, 2. In Re: The Shares of Nageshwar Investment Limited Vs Pramod Kumar Agarwal (Trade Name P.K. Agarwal and Co.). Securities and Exchange Board of India

JudgesK.M. Abraham, Member
IssueCompany Law
Judgement DateNovember 20, 2009
CourtSecurities and Exchange Board of India


K.M. Abraham, Member

  1. In the wake of unusual price movement noticed in the shares of various companies including Nageshwar Investment Limited (hereinafter referred to as the company) listed on Calcutta Stock Exchange Association Limited (hereinafter referred to as CSE), during April 2005 to November 2005 (hereinafter referred to as the investigation period), Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted investigations into the buying, selling and dealing in the shares of such companies. It was inter alia observed that some of the stock brokers with the connivance of various clients executed substantial trades in the form of cross deals/synchronised trades in the shares of the company which prima facie resulted in the manipulation of the shares of the company. SEBI, inter alia, observed that various stock brokers prima facie violated the provisions of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the PFUTP Regulations) and Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations). On the basis of the preliminary analysis of trading data, SEBI, vide an ad-interim exparte order dated November 30, 2005 inter alia directed various stock brokers, including Pramod Kumar Agarwal (Trade Name: P.K. Agarwal & Co., not to buy, sell or deal in securities, in any manner, either directly or indirectly, till further directions. Subsequently, the said ex-parte order was confirmed by SEBI, vide order dated May 31, 2006. The said directions were subsequently vacated by SEBI, vide order dated August 11, 2008. Pramod Kumar Agarwal (Trade Name: P.K. Agarwal & Co. shall hereinafter be referred to as the Broker. The investigation had identified certain stock brokers, including the Broker, based on their pattern of trading and the volumes contributed by them in the shares of the company during the investigation period. It was further observed that most of the trades of the said stock brokers were 'client to client' and were executed on a single terminal of the same stock brokers and that the same was also responsible for the manipulation in the shares of the company. The Broker failed to co-operate with the investigating authority and thus alleged to have contravened the provisions of Regulation 27 (ix) of the Broker Regulations and Clause A (5) of the Code of Conduct prescribed for stock brokers under Schedule II thereof. Thereafter, an enquiry proceeding (vide order dated January 4, 2007) was initiated by...

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