November 09, 2001
PR No. 196/2001

In the matter of Shri. Anand Rathi & associate entities

Shri Anand Rathi, the then President of the Stock Exchange, Mumbai (BSE), had sought some information on the 2nd March,2001 in respect of the position of some brokers / FIIs in certain scrips from the Surveillance Department of BSE. 

SEBI on 12th March,2001 passed under sections 11 and 11B of the SEBI Act,1992 passed the following orders : 1) restrained Shri Rathi from acting as director-member of the BSE and also 2) directed Shri Rathi and his four associate entities (viz. Anand Rathi Securities Pvt. Ltd., Rathi Global Finance Ltd., Rathi Capital & Securities Pvt. Ltd. and Navratan Capital & Securities Pvt. Ltd.) not to undertake any fresh business as brokers till further orders were passed by SEBI. 

Subsequently, a post-decisional hearing was given before the entire Board which confirmed the above order on 23rd April,2001. Shri Rathi challenged the above order before the Hon'ble High Court, Mumbai. The Hon'ble Court, Mumbai vide its judgement dated 2nd May,2001,inter alia, directed SEBI to complete the enquiry and take decision expeditiously. The Enquiry Officer submitted his report to the Board on 26th September,2001. This was followed by a show cause notice. After hearing Shri Rathi and his associate entities on November 1,2001, the SEBI Board today has passed the following orders :-

  1. Shri Anand Rathi has been restrained under section 11 and 11B of the SEBI Act,1992 from holding any position of director or trustee of any capital market related institutions / entities for a period of two years w.e.f. 12th March 2001. While passing the order, the Board has distinguished the ratio of the judgement in Sterlite Case passed by the Securities Appellate Tribunal which was relied on by Mr.Rathi. The Board has followed the precedent as set in the case of Shri R.K.Agrawal, the former President of Utter Pradesh Stock Exchange wherein the Tribunal upheld the orders of SEBI imposing similar penalty of restraining him from associating with capital market related institutions.

  2. M/s. Anand Rathi Securities Pvt.Ltd. have been suspended for a period of 9 months w.e.f 12th March 2001 under regulation 26 of SEBI ( Stock Brokers and Sub-brokers ) Regulations,1992.

  3. M/s. Rathi Capital & Securities Pvt.Ltd. ( now known as Anand Rathi Direct India Pvt.Ltd. ) has been suspended for a period of 9 months w.e.f. 12th March,2001 under regulation 26 of SEBI ( Stock Brokers and Sub-Brokers ) Regulations,1992.

  4. With regard to M/s. Rathi Global Finance Ltd., a dealer of OTCEI, as it was found that since this entity is not doing any business and has already surrendered its membership card, no penalty of suspension was imposed. 
    Navratan Capital & Securities Pvt. Ltd. No penalty was imposed on this entity as the Board agreed with the findings of the Enquiry Officer that this entity was under the control of Gupta family and not under the Rathi family.