The Hindu Business Line : SEBI suspends CSFB Securities for a month

The order arose out of SEBI's initial investigation into the abnormal price movement in the shares of South East Asia Marine Engineering and Construction Ltd during June 1, 1999 to May 31, 2000.

Mumbai , Aug. 11

The Securities and Exchange Board of India on Friday suspended registration certificates of Credit Suisse First Boston (India) Securities Ltd (CSFB Securities) for a month, on charges of failing to abide by the code of conduct prescribed for brokers.

The code stipulates that a registered broker must sign a sub-broker agreement before allowing any person to act in that capacity. In the instant case, CSFB Securities had, according to SEBI, allowed C. Mackertich Ltd (CML) to put trades through on behalf of the latter's Director, Mr Ajay Kumar Kayan, thereby creating a sub-broker relationship vis-a-vis CSFB Securities.

By allowing such trades to be put through, it has violated the relevant SEBI regulations, Mr G. Anantharaman, Whole-Time Member, SEBI, has said in his order.

Alleged violation

The order arose out of SEBI's initial investigation into the abnormal price movement in the shares of South East Asia Marine Engineering and Construction Ltd during June 1, 1999 to May 31, 2000. In a span of eight months, the price had spurted from Rs 15 to Rs 389.

Replying to a show-cause notice issued to CSFB Securities in January 2005, it had submitted that CML was its client and not a sub-broker. The broking company also stated that it had stopped dealing with CML on being told that it was not permissible to trade with another member of the same exchange.

"From the facts available on record, I do not agree with the submission of CSFB Securities, that CML was acting as its client, as the nature of trades make it apparently clear that CML had executed most of the trades through CSFB Securities for one of its brokers. The fact that CML has acted as an intermediary (sub-broker) between CSFB Securities and its Director Mr Ajay Kumar Kayan is further demonstrated from the statement of CML recorded by SEBI during investigation," Mr Anantharaman said in his order.

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