Sebi suspends a broker for 2 months for fraudulent acts

Market watchdog Sebi today suspended broker Rajesh N Jhaveri for two months for indulging in fraudulent activities and violating broker norms with respect to dealings in shares of Manna Glass Tech Industries.
Earlier this month, Jhaveri was also suspended for six months for 'fraudulent and manipulative' trade practices in the shares of Ojas Technochem Products.
In the order today, the Securities and Exchange Board of India (Sebi) said the two-month suspension on Jhaveri would "run concurrently" with the six-month suspension imposed earlier this month on him.
The latest case pertains to 1.8 crore shares issued by Manna Glass on preferential basis to 5 promoter entities and 12 non-promoter entities in January 2000.

According to the regulator, Jhaveri facilitated four allottees in selling shares that were allotted to them, thereby aiding and abetting them to make wrongful gain defrauding other investors.
Moreover, Jhaveri was found to have acted as a unregistered sub-broker to BSE member, Shrikant G Mantri.

Sebi probe found that Jhaveri had played a significant role "in the manipulative activities of Manna Glass, its promoters and related entities including the allottees thereby facilitating them to realise about Rs 87 lakh by selling the said shares allotted on preferential basis".
Further, Sebi said that the transactions took place on BSE, a exchange where Jhaveri was not even registered as a broker/sub-broker and that the allottees have not dealt in any other scrips other than the scrip of Manna Glass.

Sebi said its probe clearly indicated the "complicity of the noticee (Jhaveri) in the whole scheme of manipulation and also that the noticee has not acted in good faith".
Accordingly, the regulator has suspended the registration of Rajesh N Jhaveri "for a period of two months".
During the period January 1999 to July 1999 there was spurt in the trading in the scrip of Manna Glass compared to its trading during the previous two years at the BSE.
It was found that Jhaveri's 4 clients -- Indian Shelters, Growth Agro Industries, Omega Avenues, Sarlee Fabrics Exports -- were found to have dealt in the scrip substantially through certain brokers/sub-brokers, during which the price and volume of the scrip shot up.

Subsequent to this on January 2000, Manna Glass issued 1.8 crore shares on preferential basis to 5 promoter entities and 12 non-promoter entities including group of 4 clients.
According to the regulator, the shares were allotted on preferential basis without infusion of money.