Case: SEBI Vs Shri Sanjay Bansal. Securities and Exchange Board of India
| Judges | T.M. Nagarajan, Member |
| Issue | Securities and Exchange Board of India Act, 1992 - Section 11(4) and 11B |
| Judgement Date | December 09, 2003 |
| Court | Securities and Exchange Board of India |
Order:
Background
-
Shri Sanjay Bansal (hereinafter referred to as "the said broker") is a member of The Guwahati Stock Exchange and a member of The Inter Connected Stock Exchange of India (hereinafter referred to as ICSE). He is also a stock broker registered with SEBI under Registration No. INB 131037112 and a sub broker registered with SEBI under Registration No. INS 231297511.
Inspection by SEBI
-
The Securities and Exchange Board of India (hereinafter referred to as SEBI) received information that Sunil Kayan(Trade Name:Sunil Kumar Kayan & Co.) (hereinafter referred to as "Sunil Kayan"), a stock broker registered with SEBI under Registration No.INB030668917 was indulging in illegal trading in securities. Whole Time Member, SEBI, vide order dated 13.8.2003 directed that an inspection of the office of Sunil Kayan be undertaken by SEBI. Pursuant to the order, inspection of the office of Sunil Kayan at 8, Lyons Range, Kolkatta - 700001 was undertaken on 14.8.2003.
-
In the course of inspection, it was noted that three trading terminals of the National Stock Exchange (hereinafter referred to as NSE) were being operated in the office of Shri Sunil Kumar Kayan. The inspecting officials were informed that two of the three trading terminals were given by the said broker.
-
It was also noted that there were around 40 persons present in the office of Sunil Kayan at the time of inspection and that these persons fled the premises upon seeing the inspection team.
-
The inspection team also made the following findings:
-
The trading terminals given to Sunil Kayan by the said broker were unauthorised.
-
Sunil Kayan had extended unauthorised trading terminals to various persons or entities.
-
Sunil Kayan had traded in certain scrips in quantities of one or two shares and such orders constituted around 70% of his total trades. Many such transactions entered into by Sunil Kayan on his own account as well as on account of his wife /others were found to be squared off by the end of the day. The net amount receivable in such transactions was between Rs. 0.70 to Rs. 4.33.
-
Handwritten /printed papers found in the office of Sunil Kayan showed that he had transacted in futures and options without having a valid registration from SEBI as a trading / clearing member on the Futures & Options segment of NSE.
-
The sauda confirmation slips obtained from the office of Sunil Kayan showed that after entering into contract in Futures & Options for an official 'market lot', he had split the trades amongst his clients in lots less than official 'market lot'.
-
Trade details obtained from the office of Sunil Kayan showed transactions that did not have any trade number or trade time and order nos. of NSE.
-
Handwritten papers found in the office showing details of cash received and paid from / to clients indicated that many such receipts / payments were beyond limits permitted for cash transactions under the Income Tax Act.
-
A note book found in the office of Sunil Kayan indicated unexplained turnover and some difference amounts on a daily basis. The contents of the note book remain unexplained on account of non co-operation from Sunil Kayan's office.
-
On the basis of the above, the inspection team concluded prima facie that:
-
Sunil Kayan used trades executed by him on the trading terminals as bench marks for prices of the scrips and based on these prices; larger trades were executed outside the stock exchange mechanism.
-
Besides indulging in unauthorised trading in Futures & Options, Sunil Kayan indulged in trades in Futures & Options outside the Stock exchange mechanism.
-
Sunil Kayan entered into off the floor transactions in securities and not reported them to the stock exchange.
-
The said broker had placed two terminals of NSE at the disposal of Sunil Kayan and had thereby aided and abetted him in his illegal activities.
Interim Order
-
Based on the above findings, vide order dated 20.8.2003, the said broker and Sunil Kayan have been restrained from buying, selling or dealing in securities in any manner pending completion of inspection and determination of further appropriate action.
Post Decisional Hearing
-
A post decisional hearing was granted to the said broker on 9.9.2003. The said broker appeared before me and was also assisted by Shri J.J. Bhatt, Advocate. In the course of hearing, the said broker made written submission and also oral submissions.
-
The written submissions in brief are as under:
-
The noticee is a member of Gauhati Stock Exchange and in that capacity he became a member of ICSE. ICSE's subsidiary company, ISESS, is a member of the NSE. The noticee is a SEBI registered sub-broker affiliated to ISESS w.e.f. 21st March 2002. ISESS provided CTCL...
To continue reading
Request your trial