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Dinesh Narayanan

Mumbai , April 8

THE Supreme Court had last week upheld an order of the Securities Appellate Tribunal (SAT) that reduced punishments handed out by the Securities and Exchange Board of India (SEBI) to four entities of stockbroker Nirmal Bang allegedly for manipulating the prices of 10 stocks in early 2001. This paves the way for the suspended firms to resume business from April 19.

Mr C. Achuthan, then Presiding Officer of SAT, had on October 31, 2003, set aside a SEBI order cancelling the certificates of registration of Nirmal Bang Securities Pvt. Ltd (NBS), Bang Equity Broking Pvt. Ltd (BEB), Bama Securities Ltd (Bama) and Bang Securities Pvt. Ltd.

The tribunal had let off Bang Securities without penalty and reduced the punishment of NBS to two-years' suspension and that of BEB and Bama to three years. It had also said that the periods of suspension and cancellation already undergone could be treated as having served the suspension.

The Counsel representing the Bang entities told Business Line that the Supreme Court declined to accept SEBI's petition. According to him, the Court said it did not want to interfere with the order of the tribunal since it did not find any question of law.

"The Bang entities have indulged in large trading transactions with a view to depress the market artificially in a concerted manner, short sales, synchronised trading, trading in particular time slots when the share prices registered substantial fall, routing of large transactions through unregistered sub-brokers and guilty of violating the code of conduct specified in Schedule II of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 and Regulation 4(a) to (d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 1995," the SEBI Chairman, Mr G.N. Bajpai, had said ordering cancellation of registration of the four firms.

The appellate tribunal, however, set aside the cancellation saying the SEBI had failed to prove with reasonably convincing evidence the charge of artificially depressing the market and dealing with unregistered sub-brokers and had been unable to prove any charge against Bang securities.

Since SEBI first suspended the entities on April 18, 2001, all of them would have completed the punishment on April 18 this year and be able to resume business from the next day.

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SC order allows Nirmal Bang cos to resume business from April 19

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