February 04, 1998
PR No. 21/1998

Actions taken by SEBI against Hoffland Finance Ltd. & Hoffland Share Shoppe Ltd.

An investigation was carried out by SEBI in the scrip of JVG Departmental Stores (JVG DS)to probe into the alleged creation of false market in this scrip, as abnormally high volumes accompanied with price rise was noticed, right from the first day of listing. The investigations prima facie revealed that Hoffland Finance Ltd. (HFL) had purchased large quantities on BSE and DSE, and was involved in the creation of false market. Investigations also revealed that HFL did not act in the best interest of their portfolio clients . Pursuant to submission of the Investigation Report enquiry proceedings were initiated to enquire into the violations by HFL. After taking into consideration the evidence and submissions on record, findings of the Enquiry Officer and the reply by HFL to the show cause notice, Chairman, SEBI found HFL guilty of not dealing professionally and in the best interest of their portfolio clients. HFL was also found guilty of creation of false market in the scrip of JVG DS. In view of this, an order has been passed , withdrawing the permission granted to HFL for undertaking the Portfolio Management activities and directing them for handing over the existing portfolio to the respective clients within 15 days of the receipt of this order. It may be mentioned that by an order under section 11B of the SEBI Act read with Regulation 11 of SEBI ( Prohibition of Fraudulent and Unfair Trade Practices) Regulations HFL has already been directed not to accept any fresh assignment as Merchant Banker. 
Further, at DSE substantial purchases of JVGDS shares were made by HFL through its associate M/s Hoffland Shares Shoppe Ltd. (HSSL) which constituted 80% of the purchases at the Exchange. Investigations revealed that HSSL was responsible for determining an abnormally high price of Rs.103/- for scrip which was issued at par. Pursuant to investigations, an Enquiry Officer was appointed under the SEBI (Stock Brokers and Sub-Brokers)Regulations, 1992. On perusal of the reply of the show cause notice, evidence on record and submissions of HSSL, Chairman, SEBI concluded that HSSL has abetted HFL in creation of false market. Consequently, an order has been passed suspending the broker for a period of six months. This order of HSLL will come to force with effect from February 9, 1998.