November 03, 2006
PR No. 242/2006

Order against Jhaveri Securities Pvt. Limited in the matter of IPO Investigations

Shri G. Anantharaman, Whole Time Member, SEBI has passed final order on November 3, 2006 against M/s Jhaveri Securities Pvt. Ltd (JSPL) in the matter of IPO Investigations directing "JSPL, depository participant of NSDL, not to open fresh demat accounts for a period of nine months. The period of prohibition already undergone by JSPL vide SEBI order dated April 27, 2006 would be set off against the said period of nine months."

JSPL failed to exercise due diligence and care as required of a SEBI registered intermediary in the matter of opening of 534 demat accounts. The said 534 demat accounts held with JSPL were afferent accounts of one of the key operators, Shri Biren Kantilal Shah which had been used by him for cornering shares of various IPOs / Public issues to the detriment of genuine retail investors. The very fact that these accounts have turned out to be suspect on enquiry and also duly buttressed by the admission of JSPL in its reply dated October 27, 2006 is clearly demonstrative of a signal failure on the part of JSPL. What really heightened the gravity of the matter was that the key operator was allowed by JSPL to continue the said abhorrent practices with impunity even after SEBI’s directions contained in the interim order dated January 12, 2006 restraining Shri Biren Kantilal Shah, without exercising necessary precautions and due diligence.


November 03, 2006


For full copy of order against Jhaveri Securities Pvt. Limited click here.