Sebi Notice To 23 Pse Brokers

After dilly-dallying for over a year, the Securities and Exchange Board of India (Sebi) has finally slapped show-cause notices on 23 errant Pune Stock Exchange (PSE) brokers asking why they should not be suspended from trading.

The Sebi show-cause issued on Friday evening plans suspension of the PSE brokers ranging from 3 months to two years depending on the extent of involvement of the brokers in illegal trading.

Out of the 23 brokers, two broking firms- Janavi Investments and Pratik Investments face the maximum suspension of two years. Three other brokers - J N Wagh (former PSE vice-president), V M Rathod (former PSE treasurer) and R K Chandak faces six month suspension. The other 18 brokers will be let off with a 3-month suspension according to the Sebi notice issued to members.

 

The 23 brokers, charged for violation of Sebi (Stock Brokers and

sub-brokers) Regulation Rules, 1992 and Sebi Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market Regulation, 1995, are required to reply within 21 days to the Sebi board.

The Sebi board, presided by chairman D R Mehta, after considering the replies to the notice if received, will pass an order within 30 days and impose the penalty.

During the Sebi raids in February 1996 on Pune, Calcutta and Ahmedabad brokers, the investigating team had found PSE and other exchange brokers were indulging in illegal trading. The PSE brokers were charged for illegal badla trading, non-reporting of off-the-floor deals and evading margins. At the time of the raids, the PSE brokers had admitted that they were indulging in illegal trading. However, at the time of the hearings conducted by the Sebi investigations team led by L K Singhvi, some of the brokers denied their involvement in any illegal trading.

When contacted, P L Kadlaskar, executive director, PSE denied any knowledge of the show-cause notice and its contents. I received 33 sealed packets from Sebi to be handed over to the 33 brokers, and I am not aware of the contents, he said.

Mohan Gujarathi, president, PSE Brokers Forum, described the charges made by Sebi against PSE brokers as lapses. Its just a lapse in presentation of transactions. Instead of punishing the brokers, the lapses should be rectified., he said.

Financing against shares is a legitimate activity, he added. Gujarathi, who is also facing suspension, asserted that Sebi should take a lenient view on the case.