INVESTIGATIONS ENFORCEMENT AND SURVEILLANCE DEPARTMENT

Abnormal price rise accompanied with large volume was witnessed in the scrip of North Star Gems (India) Ltd. (NSGIL) on The Stock Exchange, Mumbai. The price of the scrip touched a high of Rs. 176/- at BSE and in the auction/close-out the price went up to Rs. 209/-. In view of these, an investigation was initiated by SEBI into the alleged price manipulation in the scrip of NSGIL. 

Investigations revealed that Dr. Amit Shah in connivance with promoter of NSGIL, Dr. Piyush Mehta and with the assistance of other persons/entities, cornered majority of the floating stock of the scrip (more than 90%). Investigations also revealed that, Dr. Amit Shah also dealt in the scrip at BSE in substantial quantities through different brokers with an intention to create an artificial market and manipulate the price in the scrip. Pursuant to investigations, SEBI has already issued directions under Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 read with Section 11 B of the SEBI Act against Dr. Amit Shah, Shri. Piyush Mehta and other associated persons and entities, prohibiting them from dealing in securities including NSGIL and accessing capital market for suitable periods ranging from two years to five years. 

As a result of investigations, enquiry proceedings were initiated against the brokers including, M/s Satyanarayan Nangalia and M/s Kirti J. Shah under the provisions of SEBI (Stock Brokers and Sub-Brokers) Rules and Regulations, 1992 read with SEBI ( Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets ), 1995. The Enquiry Officer found that the Brokers did not act with due diligence and care and violated the provisions of Code of Conduct for Stock brokers prescribed under SEBI (Stock Brokers and Sub-Brokers) Rules and Regulations, 1992 and recommended that the registration granted to the broker be suspended for a period of two months and three months respectively. On completion of enquiry, another Show Cause Notice was issued and a fresh opportunity for personal hearing before Chairman, SEBI was granted. 

On careful consideration of all the records & other relevant material and findings of the investigations, it was concluded that the brokers have violated the provisions of Regulation 7 A (2) Schedule II (Code of Conduct) of SEBI (Stock Brokers and Sub – Brokers) Rules and Regulations, 1992. In view of this, SEBI had issued following orders.

1. The registration granted to M/s Satyanarayan Investments has been suspended for a period of two months. Pursuant to investigations in the case of BPL, Videocon and Sterlite, enquiry proceedings were initiated against M/s Satyanarayan Nangalia and on completion of enquiry, the registration granted to M/s. Satyanarayan Nangalia was ordered to be suspended till June 14, 2001. The present suspension would run concurrent with the suspension of the broker ordered earlier on October 16, 1999.

2. It was observed that M/s Kirti J. Shah has been declared defaulter by BSE on June 06, 2000. The broker is not eligible for re-admission to the exchange in terms of the Bye-Laws, Rules and Regulations of the Exchange. In view of this, the registration granted to M/s Kirti J. Shah has been cancelled.