Enquiry Order In respect of Triumph International Finance India Limited

WTM/PS/81/IVD/ID-08/MARCH /2011

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER IN THE MATTER OF RANBAXY LABORATORIES LIMITED In respect of Triumph International Finance India Limited (SEBI Registration No. INB 230634232) ORDER Under Regulation 28(2) read with Regulation 38(2) of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 1. The Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) conducted investigation into the dealings in the scrip of Ranbaxy Laboratories Limited (hereinafter referred to as ‘Ranbaxy’) for the period of January, 1999 to October, 1999. The trading details of the persons who had traded in the scrip were collected and analyzed along with the data of volumes contributed by the persons traded during the relevant period. During the investigation period, the price of the scrip increased from `270 as on January, 1999 to `1,200 as on October, 1999. This price rise was accompanied by significant increase in the volumes in the scrip of Ranbaxy.

2. During the course of investigation, it was inter alia revealed that the Triumph International Finance India Limited (hereinafter referred to as the ‘noticee’), registered with SEBI as a stock broker, bearing registration no. INB 230634232, while trading in the scrip of Ranbaxy executed trades in the nature of synchronized deals. Such deals were found to be mainly executed among the entities associated with Ketan Parekh.

3. Based on the findings of the investigation, SEBI initiated enquiry proceedings as against the noticee in terms of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to an ‘Enquiry Regulations’), by appointing an Enquiry Officer under Regulation 5 (1) of the Enquiry Regulations vide order dated November 29, 2002, read with subsequent order dated July 24, 2003. SEBI appointed the Enquiry Officer, to enquire into the alleged violation of the provisions of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 (hereinafter referred to as ‘PFUTP Regulations’) and SEBI (Stock Broker and Sub Brokers) Regulations, 1992 (hereinafter referred to as ‘Broker Regulations’). The Enquiry Officer submitted his Report dated March 16, 2004, in terms of Regulation 13 (1) of the Enquiry Regulations recommending a penalty of cancellation of the certificate of registration of the noticee for violating the provisions of Regulation 4(a), (b), (c) and (d) of PFUTP Regulations, Regulation 7 read with Clause A (3) and (4) of the Broker Regulations, Rule 4 (b) of SEBI (Stock Brokers and Sub Brokers) Rules, 1992, Bye-law 357 of BSE bye-laws, Rule 4 (b) and (e) of the Rules of NSE and Regulations 4.5.4 (c) and 4.6.2 of Regulations of NSE.

4. Subsequently, a show cause notice dated January 30, 2006 (hereinafter referred to as ‘SCN’) under Regulation 13 (2) of the Enquiry Regulations was issued to the noticee asking it to show cause as to why the appropriate action including the penalty recommended by the Enquiry Officer, should not be imposed. The noticee was advised to reply to the SCN, together with the documents that it may choose to rely upon in support of the reply within fifteen days of the receipt thereof. The noticee was also informed that in case of failure, it would be presumed that it had no explanation to offer and that SEBI shall be free to take such action in the manner as it deemed fit. Vide this SCN, the noticee was also asked to explain as to why consequential action under Regulation 3 (2) of SEBI (Criteria for Fit and Proper Person) Regulations, 2004, should not be taken against it. A copy of the Enquiry Report was also forwarded to the noticee along with the SCN.

5. The noticee replied to the SCN vide its letter dated March 07, 2006, and requested for an opportunity of personal hearing. Accordingly, an opportunity of hearing was granted to the noticee on March 11, 2010. On the date fixed for hearing the noticee failed to appear for the personal hearing despite due intimation issued to it. Further, no communication was received from the noticee. Pursuant to this, the noticee filed an application for the settlement of proceedings through a consent order. The application filed by the noticee was dealt in accordance with the SEBI Circular dated April 20, 2007. Subsequently, the proceedings initiated under the SCN were revived as the application for consent was rejected by SEBI. Having seen that sufficient opportunity have been given to the noticee to explain its case, I am compelled to proceed with the matter on the basis of material available on record, having complied with the principles of natural justice.

6. I have carefully considered the Enquiry Report, the SCN issued to the noticee and its reply. The main submissions of the noticee, in brief are: - Alleged transactions are genuine trades and were executed on the instructions of their clients, while acting as broker. The trades were done on the order matching mechanism of exchange. - It had exercised proper due diligence by ensuring that the clients are not fictitious and their pay in and pay out obligations are met in accordance with the requirement of exchange. - Compared to the overall volumes in the scrip, the volumes traded by it were very low. It has denied of being a Ketan Parekh entity. - Have not been provided with complete trade/ order logs and other information. Sought cross examination of persons whose statements have been relied upon.

7. At the outset, I note the contention raised by the noticee that it has not been supplied with the trade/ order logs and other relevant documents. I observe from the Enquiry Report that no such plea was taken by the noticee before the Enquiry Officer. However, I note that no document, which has not been provided to the noticee, is being relied upon in the present proceedings.

8. Further, the noticee has argued that it was not acting in concert with the entities related to/ connected with Ketan Parekh. The argument of the noticee appears to be baseless and devoid of any merits, in view of the orders of SEBI dated May 16, 2002 and March 08, 2004, as it was found to have indulged in manipulative trades in various scrips along with the other entities controlled by Ketan Parekh. I note that these orders were challenged by the noticee before the Hon’ble Securities Appellate Tribunal (hereinafter referred to as ‘SAT’). Hon’ble SAT vide its order dated May 04, 2007, after considering the material on record dismissed the appeal of the noticee on merits. Hon’ble SAT in its order dated May 04, 2007 has held the noticee to be a close associate of Ketan Parekh and his investment/ broking companies. Pursuant to this, the noticee has filed an appeal against this order of Hon’ble SAT before the Hon’ble Supreme Court, which was also dismissed. In view of this, I note that the order of SEBI passed on May 16, 2002 holds good, by which the registration of the noticee was cancelled.

9. Considering this, I note that no useful purpose will be served by canceling the certificate of registration of the noticee once again. Therefore, I hereby dispose of the present Enquiry proceedings initiated against the noticee without passing any further order.

10. I note that pursuant to the notification of the Intermediaries Regulations, the Enquiry Regulations have been repealed and in terms of Regulation 38(2) of the Intermediaries Regulations, notwithstanding such repeal, any enquiry commenced under the Enquiry Regulations, shall be deemed to have been commenced under the corresponding provisions of Intermediaries Regulations.

11. Taking into consideration, the facts and circumstances of the case, I, in exercise of the powers conferred upon me in terms of Section 19 of the Securities and Exchange Board of India Act, 1992 read with Regulation 28(2) of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008, hereby dispose of the Enquiry proceedings as against Triumph International Finance India Limited [SEBI Registration no. INB 230634232].

DATE : 17/MARCH/2011 PRASHANT SARAN PLACE : MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA