March 21, 2006
Cease and desist order in the matter of dealing in the shares by Shri Lalit Dua and His Associates Entities
Whole Time Member, SEBI, Shri G Anantharaman vide order dated March 21, 2006 has issued the following directions in the matter of recommendations given by Shri Lalit Dua (through LRS Portfolio & Advisory Services Pvt. Ltd) and his associates entities on indiainfoline.com in certain shares and the dealing in those shares by Shri Lalit Dua and his associates entities:
1) Shri Lalit Dua to cease and desist from giving any recommendations about any investment in the securities market in any public media which amounts to violation of egulation 4(2)(f) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
2) LRS Portfolio & Advisory Services Ltd is directed to cease and desist from rendering any advice directly and indirectly any investment advice about any security in the publicly accessible media amounting to violation of clause B(7A) of the Code of Conduct for Sub Brokers laid down in Schedule III read with regulation 15 of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992
3) The promoter associated entities of Samtex Fashions Ltd namely Anju Mittal, Rama Mittal, Suresh Goel and Rachana Goel and Sincerely Finance & Investment P Ltd be prohibited from buying, selling or dealing in any manner in the shares of the company till further orders are passed by SEBI
4) Investors are cautioned to take informed decisions without being influenced by such recommendations given in the public media.
5) The website www. indiainfoline.com being a website with a wide reach and especially belonging to a SEBI registered stock broker as well as Portfolio Manager and Merchant banker, has a responsibility cast on them for exercising due care and diligence to ensure that persons with proven credentials of giving fair and truthful information and analysis alone are allowed to give advise on the portal so that the portal is not misused by persons giving advice purely on considerations of personal gains.
As a part of its ongoing efforts to protect the integrity of the market, SEBI and the stock exchanges have been closely looking at this issue of misleading recommendations made to the public on stock picks and investment advices and tips on purchase and sales of shares/securities often aired through the public media, by some of the regulated entities. During such exercise it was observed that Shri Lalit Dua, director of LRS Portfolio & Advisory Services Pvt. Ltd. a SEBI registered Sub Broker used to disseminate company favorable articles in media on a frequent basis projecting a bright future of companies whose shares are thinly traded. Thereafter, in contrast to the recommendations, his associated entities used to offload shares (purchased prior to the recommendations) of such companies on the back of induced investor interest created by his recommendations.
It was also prima facie noticed that promoter shareholding had decreased in several such scrips wherein recommendations had been given. This prima facie also pointed to the role of the promoters of the companies in the scheme of things. In the case of Samtex Fashion Ltd., substantial transactions in the nature of cross deals between the promoter of the company and entities relating to Shri Dua were noticed. Additionally, in other scrips, substantial decline of promoter�s shareholding was also observed. In some of these companies, it was noticed that the majority of entities related to Shri Dua were major shareholders in the companies prior to the recommendation and then a sharp decline in their shareholdings was observed, post recommendation.
The preliminary findings thus bring out a prima facie case of violation of SEBI (Prohibition of Fraudulent and Unfair Trade practices relating to securities market) Regulations, 2003. Further, in view of the fact that the Shri Lalit Dua is a representative of LRS Portfolio & Advisory Services Ltd which is a SEBI registered sub broker, the intermediary has violated clause B(7A) of the Code of Conduct for Sub-brokers as given in Schedule III read with regulation 15 of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992.
March 21, 2006
For full copy of order against ANJU MITTAL, click here.
For full copy of order against LALIT DUA, click here.
For full copy of order against LRS PORTFOLIO & ADVISORY SERVICES PVT.LTD., click here.
For full copy of order against RACHANA GOEL, click here.
For full copy of order against RAMA MITTAL, click here.
For full copy of order against SAMTEX FASHIONS LTD., click here.
For full copy of order against SINCERELY FINANCE & INVESTMENT PVT.LTD., click here.
For full copy of order against SURESH GOEL, click here.