August 05, 1998
PR No. 213/1998

SUSPENSION OF M/S. KHANDAWALA FINSTOCK (P) LTD. 
(FORMERLY SHRI RAJESH P KHANDAWALA) MEMBER, ASE 

Investigation, Enforcement & Surveillance

SEBI conducted investigation into the irregularities in the public issue of M/s. Hindustan Finstock Ltd. on the Ahmedabad Stock Exchange. During the investigation it was found that the subscription to the public issue from the family members of Shri Rajesh P. Khandawala was arranged after the closure of the issue with the understanding that the shares allotted to them shall be bought back by M/s. Fascinating Leasing & Finance Pvt. Ltd. a group Company of M/s. Hindustan Finstock Ltd. at a rate higher than the issue price. The buy back deal was routed through the books of Shri Khandawala which has distorted the market equilibrium for making personal gains and the said Act has led to creation of an artificial market. In pursuant to the investigation report, an Enquiry Officer was appointed by SEBI in respect of M/s. Khandawala Finstock Private Ltd. (Formerly Shri Rajesh P. Khandawala), Member Ahmedabad Stock Exchange. On the basis of the report submitted by the Enquiry Officer, a Show Cause Notice was issued under the SEBI (Stock Broker and Sub-broker), Regulation, 1992 to M/s. Khandawala Finstock Private Ltd. After considering the material on record submissions made from time-to-time and reasons given in the Enquiry Report, SEBI found him guilty of violating SEBI (Stock Broker and Sub-broker) Regulation, 1992. Therefore, an order has been passed suspending him for a period of six months. The suspension order shall come into effect from August 7, 1998.