TCP Stock Brokers barred from accepting new clients for 1 mth

Regulator Sebi today barred Pioneer TCP Stock Brokers from accepting fresh clients for one month for violating stock broking norms with respect to trading in shares of Gangotri Textiles.
A probe conducted by Sebi in the share trading of Gangotri Textiles in April-May 2006 had found that certain entities allegedly functioned as a group (Vishvas Group) and by trading through their respective stock brokers or otherwise, had allegedly executed synchronised, circular as well as reversal trades among themselves.
Praveen Poddar, who was a client of Pioneer TCP Stock Brokers (earlier known as TCP Stock Brokers), had allegedly executed illegal synchronised and circular trades in the scrip of Gangotri Textiles.

Sebi said that persistence of trading by Poddar, the proximity of time between orders in a scrip which was otherwise illiquid, and the prices at which he placed orders, should probably have alerted TCP Stock Brokers.
The regulator said that a broker is required to exercise caution with respect to any fraudulent trades by its clients and must not function as a mere agent for placing of orders.
"The broker may not have control over the trades themselves, since under normal circumstances buy/sell orders are expected to match on a price-time priority basis without human intervention.

"However placing of orders in close succession of time and date, in scrips which, based on fundamentals, would not by itself generate any investor interest, ought to have aroused the suspicion of a vigilant broker," Sebi Whole Time Member G Mahalingam said in an order.

TCP as a stock broker has violated the provisions of the stock brokers regulations by not exercising proper care and diligence, Sebi said.
Accordingly, it has prohibited Pioneer TCP Stock Brokers from "accepting fresh clients, as a stock broker, for a period of one month".