December
12, 2005
PR No.
158/2005
Order in the matter of Bhoruka Financial Services Limited
(BFSL), on Magadh Stock Exchange Association (MSEA)
Securities and Exchange Board of India
(SEBI) has passed the following orders on December 6, 2005 against the DLF Commercial Developers Ltd., the promoters of Bhoruka Financial Services Limited, Rajat Share & Stock Broker Pvt. Ltd. (Member
-MSEA) and others extending the orders passed on them earlier by SEBI on August 19, 2005 and August 24, 2005 in the matter of illegal trading of the shares of Bhoruka Financial Services Limited, on Magadh Stock Exchange Association.:
a) The acquirer namely DLF Commercial Developers Ltd. is prohibited from dealing in the scrip of
BFSL.
b) The transactions in the scrip of BFSL (which is listed on the Bangalore Stock Exchange
(BgSE) be suspended on BgSE and any other stock exchange.
c) The promoters of BFSL who are the sellers in this scrip namely Shri Satyanarayan
Agarwal, Shri Viveek Agrawal, Umah Agrawal, Siddhartha
Agrawal, Satyanarayanan Vivek Kumar HUF, M/s Prabhu Securities Limited, M/s. Bhoruka Engineering Ind. Ltd., Pragya Enterprises and its partners viz.
Smt. Umah Agrawal, Shri Viveek Agrawal and Shri Satyanarayan
Agarwal, have been directed under Section 11 B read with 11(4) to deposit the proceeds of these transactions in an escrow account opened exclusively with a nationalised bank for this purpose and they were further directed to take prior approval of SEBI for dealing in this account.
d) Under Section 19 of Depositories Act, 1996 read with Section 11 (4) of SEBI Act 1992, the
shares of BFSL lying with Central Depository Services (India) Ltd.
(CDSL) in demat form are hereby impounded till further orders. CDSL is also directed not to permit any transfers in the shares of
BFSL.
e) Rajat Share & Stock Broker Pvt. Ltd. (Member -MSEA) is directed not to deal in securities, undertake any transactions in securities as a broker registered with
SEBI.
f) MSEA is directed not to assist, regulate or control the dealings in securities in any manner whatsoever.
Besides the above directions, SEBI is also
conducting a full fledged investigation into the affairs of illegal trading conducted on
MSEA, initiated adjudication proceedings under Section 15 HB of SEBI Act 1992 against all the sellers for failure to comply with the earlier directions. Further, MSEA has also been directed to
initiate disciplinary proceedings against Shri C M
Pandey, Officiating Executive Director (under suspension) for imposing major penalty.
The order was passed by SEBI�s Whole Time Member, Shri G.
Anantharaman.
The directions in this order comes into force with immediate effect.
Background :
following ading has taken place illegallyn 13 and 19 of the SCRA has taken placel time as sought by them to submit furhter
On August 10, 2005, it came to the notice of SEBI that, the MSEA has illegally commenced trading even though it had not complied with the conditions of renewal of recognition of the exchange, which inter alia required that trading on the exchange should commence only after the setting up of the Settlement Guarantee Fund duly approved by SEBI. SEBI immediately advised MSEA to stop trading and called for the details of illegal trades that had taken place. On examination of the illegal trades, it was found that MSEA had commenced trading illegally since August 1, 2005 and out of the total trading turnover of Rs. 90.06 crores, nearly 99% of the trading turnover i.e. Rs 89.28 crores was in the scrip of BFSL. It was found that BFSL is listed only on Bangalore Stock Exchange Ltd. (BgSE) and was last traded 17 years back, in 1988 @ Rs 5/- in BgSE. This scrip which is not listed in MSEA, was admitted to trade under the permitted category by MSEA on August 1, 2005, at the request of the broker Rajat Share & Stock Broker Pvt. Ltd., member of MSEA, made on the very same day.
The above trades were executed by the promoters of BFSL of Bangalore as sellers and DLF Commercial Developers Ltd of Delhi as the acquirer. Thus the buyer DLF was located in Delhi, being a Delhi based company, while the sellers (promoters of BFSL) were Bangalore based entities and the scrip of BFSL listed only on Bangalore Stock Exchange was illegally traded on MSEA in Patna, through a broker common to the buyer and sellers based in Patna.
Accordingly, SEBI had passed interim ex-parte orders under section 12A of SCRA, section 11(4) and Section 11B of SEBI Act against DLF Commercial Developers Ltd, the promoters of BFSL, Rajat Share & Stock Broker Pvt. Ltd., the broker who traded in the shares, etc. Further, under section 19 of Depositories Act, 1996 and section 11(4) of SEBI Act, the shares of BFSL lying with CDSL in demat form were impounded and CDSLwas also directed not to
permit any transfers in the shares of BFSL. Additionally, SEBI has directed the promoters of BFSL to deposit the proceeds of these transactions in an escrow account opened exclusively with a nationalised bank for this purpose and they were further directed to take prior approval of SEBI for dealing in this account.
SEBI then gave an opportunity of hearing to all the concerned entities against whom interim orders were passed and thereafter passed the present order on December 6, 2005 extending the various directions issued in the interim orders.
Mumbai
December 12, 2005
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