ORDER
G. Anantharaman, Member
1. BACKGROUND
1.1 The shares of DSQ Biotech Ltd., now known as Origin Agrostar Ltd. (hereinafter referred to as the company) were listed at the Bombay Stock Exchange Ltd. (hereinafter referred to as BSE) and National Stock Exchange of India Ltd. (hereinafter referred to as NSE). It was noticed that substantial trades took place in the shares of the company at BSE and NSE between December 1999 to March 2001. The said trades were accompanied with a large number of structured deals wherein the buying / selling clients were found to be the related entities of the company.
1.2 Securities and Exchange Board of India (hereinafter referred to as SEBI) had conducted investigations into the aforesaid irregular transactions in the shares of the company. It was inter alia observed that, synchronized trades were executed in the shares of the company both at BSE and NSE. It was further noticed that Credit Suisse First Boston (India) Securities Ltd., (hereinafter referred to as the Broker), member of NSE and BSE and registered with SEBI as a stock Broker with registration numbers INB 010970631 and INB 220970637 respectively, had entered into transactions which were in the nature of synchronization of trades/matched orders.
1.3 In view of the above investigation findings, it was observed that the Broker had prima facie violated inter alia the provisions of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 (hereinafter referred to as the FUTP Regulations) Securities and Exchange Board of India (Stock Brokers and Sub Brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations).
2. APPOINTMENT OF THE ENQUIRY OFFICER
2.1 Pursuant to the aforesaid investigation, SEBI had appointed an Enquiry Officer vide orders dated July 5, 2005 and October 14, 2005 under regulation 4 of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as ‘said regulations’) to enquire into the alleged contraventions/ violations of the above provisions committed by the Broker.
2.2 The Enquiry Officer had conducted the enquiry in terms of the said Regulations and vide report dated November 8, 2006 found the Broker guilty of violating inter alia the provisions of FUTP Regulations and the Broker Regulations. However, taking into account the facts and circumstances of the case, the submission made by the Broker and the orders earlier passed by SEBI in respect of the affairs of the Broker in the manipulation of the shares of the company (for the same period, December 1999 – March 2001) , the Enquiry Officer had not recommended any penalty in terms of the said Regulations
3. CONSIDERATION OF ISSUES AND FINDINGS.
3.1 I have perused the Enquiry Report and other relevant materials available on record. I note that SEBI had initiated investigation inter alia into the price manipulations (for the period December 1999 – March 2001) in the shares of the company including the role of the Broker in respect of the said price manipulation. I observe that after the completion of the aforesaid investigation and upon the receipt of Enquiry Report, SEBI vide order dated June 13, 2002 suspended the certificate of registration of the Broker for a period of 2 years from April 18, 2001 (the date on which the Broker was prohibited from carrying out fresh broking activity, by an interim order dated April 18, 2001 passed by SEBI). I note that the said order was passed against the Broker taking into account the findings of the aforesaid investigation conducted by SEBI.
3.2 I observe that the transactions made by the Broker in the shares of the company during the period of investigation was examined in detail in the said order. I also note that SEBI subsequently passed an order dated December 11, 2003 and directed the Broker to be careful in future while dealing in securities. The said order also took into account the totality of the transactions entered into by the Broker in various scrips including that of the company, as would be evident from the observations in the said order that “Investigations were conducted by SEBI into the affairs of CSFB for alleged market manipulations”. Though the Broker was found guilty of violating the provisions of Clauses (b) (c) & (d) of regulation 4 of the FUTP Regulations, taking into account the penalty imposed ( on the Broker ) by SEBI vide order dated June 13, 2002, no further penalty was imposed on the Broker in terms of the order dated December 11, 2003. However, the Broker was advised to be careful while dealing in securities.
3.3 I note that the present investigation also is about the Broker’s role in market manipulations, albeit in the shares of DSQ Biotech Ltd. only. I observe that in the present proceedings, the Enquiry Officer had looked into the entire gamut of transactions of the Broker relating to price manipulation in the shares of DSQ Biotech Ltd. during the period of investigation as undertaken by SEBI. Though the Broker was inter alia found guilty of the provisions of the FUTP Regulations by the Enquiry Officer, he did not recommend any penalty on the ground that the Broker had already been punished for the manipulation in various shares including DSQ Biotech Ltd. for the same period. I find that SEBI, vide an interim order dated April 18, 2001 prohibited the Broker from carrying out any fresh broking activity. Subsequently, SEBI vide order dated June 13, 2002 suspended the certificate of registration granted to the Broker for a period of two years with effect from April 18, 2001. SEBI had also warned the Broker to be careful in future while dealing in securities, vide order dated December 11, 2003, dealing with the same material facts relating to the same investigation period. The above orders were passed by SEBI in respect of the affairs of the Broker in the market manipulation of the shares of various companies (including DSQ Biotech Ltd.) falling in the same period.
3.4 The present Enquiry Report deals with price manipulation in DSQ Biotech Ltd. only for the very same period, though it was one of the scrips considered in the earlier three orders in the very same set of facts involving the very same shares for the same period. I find that there has been an encore of proceedings covering the same scrip/scrips , the same set of facts in the same referal period. Having regard to the same, I find that no further penalty is called for in the present proceedings.
4. ORDER
4.1 In view of the foregoing, I, in exercise of the powers conferred under Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, do not impose any further penalty against Credit Suisse First Boston (India) Securities Pvt. Ltd. However, I hereby advise Credit Suisse First Boston (India) Securities Pvt. Ltd. to be careful in future.