Legal Department

Sub : CSFB - Imposition of penalty of suspension.

In the wake of excessive volatility in the index of the BSE and the NSE and the unusually volatile market behavior during mid February 2001 to mid March 2001 and also in view of possible attempts by certain entities including Credit Suisse First Boston (India) Securities Pvt. Ltd (CSFB), to distort the true price discovery and manipulate the securities markets, SEBI ordered an investigation into the transactions during the period January 2001 to March 2001. 

SEBI vide an interim order dated April 18, 2001 passed u/s 11, 11B of SEBI Act, SEBI restrained CSFB from undertaking any fresh business as a stock broker till the completion of investigation/ enquiry proceedings. The said order dated 18.4.2001 was confirmed vide order dated 4.6.2001. 

SEBI also appointed an enquiry officer vide order dated 4.6.2001 to enquire into the contravention interalia by violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities market) Regulations,1995 and SEBI (Stock Broker and sub broker) Regulations, 1992 by CSFB. 

After holding enquiry as per SEBI (Stock Broker and sub broker) Regulations, 1992, the enquiry officer vide report dated April 19, 2002, found CSFB guilty of violation of Regulation 4(b), (c), (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities market) Regulations,1995 and Regulation 7 of the SEBI (Stock Broker and sub broker) Regulations, 1992 recommended the suspension of the registration of CSFB as a broker for a period of 2 years. The 
enquiry officer also recommended that in calculating this 2 years period, the period of restraint order from April 18, 2001 be taken into account. 

Chairman, SEBI after taking into consideration the Enquiry report, reply of CSFB and submissions made during hearing vide its order dated 13.6.2002 suspended the registration of the broker for a period of 2 years from the date of passing of 11/11B order i.e. from 18.4.2001.