PRESS RELEASE - SEBI

October 05, 2005
PR No. 137/2005

Order in the matter of (1) M/s Digital Stocks & its Proprietor, Shri Dheeraj Kumar Madaan, (2) Ganpati Finsec Pvt Ltd and its directors Shri Devender Mittal, Smt. Ritu Mittal and Dr. K.C Mittal

SEBI vide order dated October 5, 2005 has issued the following directions in the matter of Eltrol Ltd. (Eltrol):


SEBI vide order dated October 5, 2005 has issued the following directions in the matter of M/s Digital Stocks & its Proprietor, Shri Dheeraj Kumar Madaan, (2) Ganpati Finsec Pvt Ltd and its directors Shri Devender Mittal, Smt. Ritu Mittal and Dr. K.C Mittal :

  1. Shri Dheeraj Kumar Madaan, Proprietor of M/s Digital Stocks, having its office at 3, Circular Road, Mawa Market, Abohar, District Ferozepur (Punjab) is prohibited, with immediate effect, from buying, selling or dealing in securities or being associated with the securities market in any manner. 
     

  2. Ganpati Finsec Pvt Ltd (GFPL) and its directors namely Shri Devender Mittal, Smt. Ritu Mittal and Dr. K.C Mittal are prohibited, with immediate effect, from buying, selling or dealing in securities or being associated with the securities market in any manner whatsoever.
     

  3. NSDL/CDSL shall freeze, with immediate effect, all the demat accounts of Digital Stocks and its proprietor Shri Dheeraj Kumar Madaan, maintained with them.
     

  4. India Bulls Securities Ltd shall freeze, with immediate effect, the trading account of Digital Stocks and its proprietor Shri Dheeraj Kumar Madaan.
     

  5. Appropriate proceedings are being initiated against SMC Securities Ltd. and SAM Global Securities Ltd. for alleged irregularities in their franchisee operations. In the meantime, these brokers are directed to review their systems and procedures and confirm to SEBI within 15 days from the date of receipt of the order that all their operations are within the framework of SEBI regulations, rules and guidelines.

All the above directions shall take effect immediately and shall be in force until further orders. 


SEBI received a complaint from Abohar Investor Forum (AIF) from Abohar, District Firozepur, Punjab and other investors alleging misappropriation of shares and funds of small investors by one Shri Dheeraj Kumar Madaan (hereinafter referred to as DKM) , Proprietor of M/s Digital Stocks, having its address at 3, Circular Road, Mawa Market, Abohar, District Ferozepur (Punjab). It was also alleged that that DKM was an associate of M/s Ganpati Finsec P. Ltd., who was a sub-broker of SAM Global Securities Ltd. (member BSE) and that DKM had absconded on 30th June 2005 with investors� money. Additionally, there were widespread media reports highlighting the fact that DKM had run away with huge money/ shares of investors. Thereafter, a preliminary investigation into the matter was conducted. 

The enquiries made by SEBI prima-facie revealed the following.-

  1. SMC claims to have its branch office at Abohar. SMC has further informed that it had entrusted the management of its said branch to its franchisee viz. GFPL, who is based in Sri Ganganagar, Rajasthan. GFPL in turn appointed DKM as the sub agent for managing SMC�s so-called branch at Abohar. DKM was managing SMC�s so-called branch at Abohar for around 3 years. DKM was neither an employee of GFPL nor of SMC.
     

  2. DKM was trading for a large number of Abohar based investors. DKM was not putting client codes on the terminals and all the orders by various Abohar based clients were placed in common client code i.e. 99G606, which is of GFPL.
     

  3. DKM had without informing his investors, closed his establishment and run away on 30th June 2005 with the money/ shares of various investors. He alongwith his wife are reportedly untraceable till date.
     

  4. The investors thereafter formed an association in the name of �Abohar Investors Forum� to get their dues. AIF had initially contacted Shri Devender Mittal of GFPL, Ganganagar, but he refused to acknowledge investors� claim. After DKM became untraceable, AIF had advertised in local newspaper asking investors to register with AIF. 59 investors have made a claim of around Rs. 50 lacs with AIF.
     

  5. SMC has subsequently informed that it had suspended all the trading IDs of its NSE terminals located in Abohar. Further, SAM had informed that it had frozen the demat account of DKM with it.
     

  6. DKM even after running away with investor funds/shares on 30.06.2005 continues to be actively involved in securities business and is trading through internet module of India Bulls

The findings of the preliminary investigation as above brought out that DKM defrauded small investors of their money & shares. These activities are in violation of SEBI (Prohibition of Fraudulent and Unfair Trade practices relating to securities market) Regulations, 2003. Further, the dealings by DKM as an unregistered sub-broker is prima facie in violation of section 12(1) of SEBI Act, 1992 and Rule 3 of SEBI (Stockbroker and Sub Brokers) Rules, 1992. Furthermore, even GFPL was not registered with SEBI as a sub-broker and was thus acting as unregistered sub-broker in violation of section 12(1) of SEBI Act and Rule 3 of SEBI (Stockbrokers and Sub brokers) Rules, 1992. Apart from the above, brokers SAM Global Securities Ltd. and SMC Securities Ltd. have also prima facie violated SEBI circular SMDRP/Policy/Cir/49/2001 dated 22.10.01 by giving trading terminals at places other than registered office, branch office or registered sub-broker offices. It was prima facie seen that SMC/SAM has installed their terminals at various places in and around Sri Ganganagar (including Abohar). SMC/ SAM have a franchise agreement with GFPL, specifically for Sri Ganganagar location and their terminals at other places were also being managed by GFPL .

Under the facts and circumstances as stated above, it is therefore incumbent upon the regulator to take emergent and remedial steps to safeguard the interests of the investors and the orderly development of the securities market. In view of the aforesaid and with a view to protect the interest of investors, Shri G. Anantharaman, Whole Time Member, SEBI has passed the above order.
 
 
Mumbai

October 5, 2005

For full copy of order against DEVENDER MITTAL, click here.

For full copy of order against DHEERAJ KUMAR MADAAN, click here.

For full copy of order against DIGITAL STOCKS, click here.

For full copy of order against GANPATI FINSEC PVT.LTD., click here.

For full copy of order against K.C.MITTAL, click here.

For full copy of order against RITU MITTAL, click here.

For full copy of order against SAM GLOBAL SECURITIES LTD., click here.

For full copy of order against SMC GLOBAL SECURITIES LTD., click here.

For full copy of order against SMC GLOBAL SECURITIES LTD., click here.

For full copy of order against SMC GLOBAL SECURITIES LTD., click here.