Sebi suspends 3 brokers for 2 weeks for fraudulent trades

Market watchdog Sebi has suspended registration of three stock brokers "for a period of two weeks" for fraudulent trade activities in shares of BPL Ltd, Videocon International and Sterlite Industries, back in 1998.
The suspension of three brokers, First Custodian Fund (India), Shrikant G Mantri and Harvest Deal Securities, would come into force on expiry of 21 days from today, Sebi said.
In three similarly-worded orders, the market watchdog said that the three brokers acting in concert with each other "had traded in the scrips of BPL, Sterlite and Videocon to create artificial market in these scrips without effecting the transfer of beneficial ownership of the shares and manipulate the prices thereof".

"The said acts were fraudulent in terms of ... The PFUTP (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations," it added.
While Mantri and Harvest Deal are both trading members with the BSE, First Custodian is a member of the National Stock Exchange (NSE).
A probe by the Securities and Exchange Board of India (Sebi) had found that three brokers were "associate concerns and operated from the same office".

They had acted in a concerted manner to create an artificial market in the three companies shares and manipulated their prices by building up large positions, during April and May 1998.

The probe also found that the brokers had dealt with a common set of clients referred to by Sebi as "Damayanti Group" entities who were acting as front entities for Late Harshad Mehta, suspended broker of BSE and an accused in the securities scam of 1992.
Sebi also said that Mantri and Harvest Deal had "intentionally" not provided correct information to the market regulator about their transactions in the scrips of BPL, Sterlite and Videocon.
Sebi also noted that "considerable time" had elapsed since the initiation of the proceedings against the brokers.
"While delay in itself cannot be a ground for exonerating the noticee, it can be treated as a mitigating factor," Sebi said in the orders.

"Thus, I am of the view that the suspension of certificate of registration of the noticee for a period of two weeks would be commensurate with the violations established against it," it added.