For full copy of order against PUNE STOCK EXCHANGE LTD., click here.

PRESS RELEASE - SEBI
April 07, 2003 
PR No. 85/2003

SMD

Supersession of the Board of Directors of Pune Stock Exchange Ltd (PSE)

SEBI has by Order issued under section 11 of the Securities Contracts (Regulation) Act, 1956, [ SC (R ) A] superseded the Board of Directors of the Pune Stock Exchange Ltd, with effect from April 04, 2003 and have appointed Shri B.D. Banerjee as the Administrator of the Exchange to exercise and perform all the powers and duties of the Board. 

It was observed during the investigation into the listing and price-rise of securities of M/s Home Trade Ltd and the annual inspection conducted of the Exchange and its subsidiary conducted by SEBI, that the general functioning and administration of PSE by the Governing Board, which took over on September 29, 2001, was not carried out in accordance with provisions of the Securities Contracts ( Regulation) Act, 1956 and the Rules. The serious irregularities / lapses found during the said investigation, inspection are mentioned briefly :- 

  • Listing permission granted by PSE to M/s Home Trade Ltd (formerly Euro-Asian Securities Ltd) was not in accordance SC (R ) A, its Rules and Listing Agreement.

  • The PSE did not conduct any inspection of brokers or take any risk containment measures such as imposition of special margin, putting the scrip on spot basis, suspension of trading in the scrip, indefinite suspension to curb/ check the artificial price rise etc.

  • Large scale violations were observed in the surveillance areas of the exchange i.e the stock watch system etc.

  • It was observed in the subsidiary that the sub-broker terminals were activated before getting SEBI registration.

SEBI therefore was of the opinion that the Board has failed to ensure proper governance, implementation of the provisions of the Securities Contracts (Regulation) Act, 1956, byelaws of the exchange and SEBI directions/ guidelines. 

In view of the above serious deficiencies, SEBI issued a notice u/s 11 of the Securities Contracts (Regulation) Act, 1956 to the Board of PSE as to why they should not be superseded. An opportunity of hearing was given on September 16, 2002. However, it was observed that the Board had not rectified or addressed the issues. The Board has failed to ensure proper governance, implementation of the provisions of the Securities Contracts (Regulation) Act, 1956, byelaws of the exchange and SEBI directives. As a result of this, the confidence of investors in transparent and impartial working of the stock exchange has been impaired.

Therefore it was felt that it is essential to adopt immediate measures to ensure the safety and integrity of the stock exchange and further to ensure that transactions on Pune Stock Exchange Ltd are carried out as per the regulatory framework and the interest of investors are not jeopardized further. Accordingly, SEBI has superseded the Board of Directors of Pune Stock Exchange Ltd.