Sebi suspends Jhaveri for 6 mths for fraudulent trade

Capital market regulator Sebi today suspended stock broker Rajesh N Jhaveri for six months for indulging in 'fraudulent and manipulative' trade practises.
The Securities and Exchange Board of India said in its order that it has "suspended the registration of Rajesh N Jhaveri for a period of six months" for fraudulent trade activities in the shares of Ojas Technochem Products Ltd.
The order will come into force immediately on the expiry of 21 days from today's order, Sebi said.
It was found that OTPL had made preferential allotment of 60 lakh equity shares to certain entities on January 13, 2000 and these shares were listed on Vadodara Stock Exchange (VSE) on January 17, 2000. These scrips issued on preferential basis were not listed on BSE.

According to the regulator, Jhaveri in connivance with the promoters and its related entities of OTPL allotted shares of the company on preferential basis without infusion of money. They aided and abetted in creating false and misleading appearance of trading in the company's scrips.
Also, Jhaveri acted as unregistered sub-broker during its dealing in the shares of OTPL.
"The notice, (Jhaveri) being a registered intermediary, was not expected to indulge in such 'fraudulent and manipulative' trade practice in violation of the provisions of Sebi PFUTP Regulations and the code of conduct as prescribed for stock broker..," Sebi noted.
"The transactions entered into by the noticee have interfered with the normal price discovery mechanism of the stock exchange as it created artificial and price in the scrip of OTPL, which facilitated the promoter and its related entities to make wrongful gain, by offloading their shares including unlisted shares in the market to the genuine investors," it added.