February 13, 2006
PR No. 89/2006

Order in the matter of dealing in the shares of M/s VBC Ferro Alloys Ltd. by M/s BLB Ltd., Member, The Stock Exchange, Mumbai and The National Stock Exchange Limited.

SEBI vide order dated February 10, 2006 has issued the following directions in the matter of dealing in the shares of M/s VBC Ferro Alloys Ltd. by M/s BLB Ltd. (BLB), Member, The Stock Exchange, Mumbai (BSE) and The National Stock Exchange Limited (NSE).

1. M/s BLB Ltd to cease and desist from giving any recommendations about any investment in the securities market in any public media which amounts to violation of Regulation 4(2)(f) and 4(2)(r) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.

2. M/s BLB Ltd to cease and desist from committing or causing any violation of clause B(7A) of the Code of Conduct for Stock Brokers laid down in Schedule II read with regulation 7 of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992.

3. M/s BLB Ltd and Vikram Rathi are hereby directed not to buy, sell or deal in securities of M/s VBC Ferro Alloy Ltd., directly or indirectly, till further directions in this regard.

4. That the Depositories shall not give effect to any transfer of shares of M/s VBC Ferro Alloy Ltd., lying in the beneficial owner accounts of the M/s BLB Ltd, and Vikram Rathi.

As a part of its ongoing efforts to protect the integrity of the market, SEBI and the stock exchanges have been closely looking at this issue of misleading recommendations made to the public on stock picks and investment advices and tips on purchase and sales of shares/securities often aired through the public media, by some of the regulated entities. During such exercise it was observed that the research wing of BLB Ltd. (a SEBI registered broker with BSE and NSE) had given �strong buy� recommendation on the shares of VBC Ferro Alloys Ltd. (the company) in one of the leading financial dailies on September 12, 2005. 
 
The analysis of the trading in the shares of the company by BLB revealed that BLB purchased a large quantity (3.72 lakhs) of the shares of the company prior to its �strong buy� recommendation about the company�s shares in the media and sold around 1.61 lakhs shares after the recommendation and thereby made substantial gains. The sudden buying interest led to the price of the scrip moving from Rs. 118.45 on September 1, 2005 to Rs 176.50 on September 6, 2005 and may have possibly acted as a catalyst in attracting the attention of the investors towards this share. Correspondences with the company confirmed that they had nothing to do with either BLB�s trading in the company�s shares or their publication of the company�s profile and projections. 
 
Such trading strategy appears to be in violation of Regulation 4(2) (f) and 4(2) (r) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
 
It is also gathered from the company and the exchange that BLB Ltd did not make any announcement under Regulation 13 (3) of SEBI (Prohibition of Insider Trading) Regulations, 1992 for change of its shareholding in the company by more than 2% to them and thereby appears to have violated the said regulation by non-disclosure of change in the shareholding.
 
While making investment recommendations on securities in the media, BLB did not disclose its interest in the securities. In view of the fact that BLB is a SEBI registered broker with BSE and NSE, the intermediary has violated clause B(7A) of the Code of Conduct for Stock Brokers as given in Schedule II read with regulation 7 of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992.
 
 
Mumbai

February 13, 2006

For full copy of order against BLB LTD., click here.

For full copy of order against BLB LTD., click here.

For full copy of order against BLB LTD., click here.

For full copy of order against BLB LTD., click here.

For full copy of order against VIKRAM RATHI, click here.

For full copy of order against VIKRAM RATHI, click here.