Order against M/s. Harvic Management Services India Limited

SECURITIES AND EXCHANGE BOARD OFINDIA Coram: Dr. T. C. Nair, Whole Time Member ORDER UNDER REGULATION 13(4) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002, AGAINST M/s. HARVIC MANAGEMENT SERVICES INDIA LIMITED (PAN – AABCH1644M), SUB-BROKER AFFILIATED TO M/s. B. M. GANDHI SECURITIES LTD., MEMBER, BOMBAY STOCK EXCHANGE LTD., MUMBAI AND BEARING SEBI REGISTRATION NUMBER INS 010496938 IN THE MATTER OF THEIR DEALING IN THE SCRIP OF M/s. NUMERO UNO PROJECTS LIMITED WTM/TCN/ID6/ 57/08/2007 1.0BACKGROUND 1.1The Securities and Exchange Board of India (hereinafter referred to as “SEBI”) had conducted an investigation in the dealing in the scrip ofM/s. Numero Uno Projects Limited (hereinafter referred to as ‘the company’ or ‘NUPL’) for the period from June, 2002 to July, 2002. The investigations alleged that M/s. Harvic Management Services India Limited (hereinafter referred to as ‘sub-broker’), a sub-broker affiliated to M/s. B. M. Gandhi Securities Ltd., Member, Bombay Stock Exchange Ltd., Mumbai, bearing SEBI Registration number INS 010496938had violated the provisions of Regulation 4 (b) and (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 (herein after referred to as ‘FUTP Regulations’), Code of Conduct for Sub-Brokers specified in Schedule II read with Regulation 15 of the SEBI (Stock Broker and Sub-broker) Regulations, 1992 (hereinafter referred to as ‘Broker Regulations’), SEBI Circular SMD/SED/CIR/93/23321 dated 18-11-1993 and SEBI Circular SMD/POLICY/CIRCULAR/5-97 dated 11-04-1997.

In view of the above allegations, it was thought fit to conduct an enquiry against the sub-broker. 1.2Accordingly, SEBI vide an order dated26-07-2004appointed an Enquiry Officer to enquire into the contraventions, if any committed by the sub-broker while dealing in the scrip of the company. 2.0ENQUIRY PROCEEDINGS 2.1In order to convey the charges against the sub-broker, a notice in terms of Regulation 6(1) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as the ‘Enquiry Regulations’) was issued to it. The notice also enclosed documents which were the basis for the allegations against the sub-broker. The notice required the sub-broker to reply to the same within 21 days. 2.2The sub-broker had replied to the notice by its reply dated21-09-2004through their counsel. The Enquiry Officer had also heard the sub-broker in accordance with Regulation 9 of the Enquiry Regulations. 2.3After conducting the enquiry, the Enquiry Officer vide his Report dated31-01-2005 had concluded that the sub-broker had violated the provisions of Regulation 4 (b) and (d) of the FUTP Regulations and Clauses A(1) and (2), B(8) and D(3), (4) and (5) of the Broker Regulations.

The conclusions arrived at by the Enquiry Officer are : ·That the sub-broker has assisted the promoter associated entities in selling their shares ·That the sub-broker had accepted incomplete client registration form from its clients ·That they have routed sale of shares through other related entities so as to escape detection and suspicion of concentration of trading in thinly traded scrips ·That the sub-broker in connivance with other related entities have created artificial volumes in the scrip and thereby a false and misleading appearance of trading in the securities market ·That the sub-broker was buying and selling shares at the same time in connivance with other related entities without intending to effect transfer of beneficial ownership 2.4The Enquiry Officer based on the findings and conclusions has recommended that the registration granted to the sub-broker be suspended for a period of 3 months as penalty for their violations. 3.0SHOW CAUSE NOTICE, REPLY AND HEARING 3.1After considering the Enquiry Report submitted to it, the Board issued a show cause notice dated21-02-2005to the sub-broker under Regulation 13(2) of the Enquiry Regulations, whereby the sub-broker was to show cause as to why penalty as recommended by the Enquiry Officer or any other appropriate penalty should not be imposed for its contraventions.

The sub-broker replied to the show cause notice by its reply dated04-03-2005wherein they made their submissions. 4.0CONSIDERATION OF ISSUES 4.1I have carefully perused the Enquiry Report, the notice and the submissions made by the sub-broker. The issue before me for consideration are: i)Whether the sub-broker has entered into any dealing which contravenes the relevant provisions of the FUTP Regulations? ii)Whether the sub-broker had acted in a manner so as to contravene the provisions of SEBI Circulars, SEBI Circular SMD/SED/CIR/93/23321 dated18-11-1993and SEBI Circular SMD/POLICY/CIRCULAR/5-97 dated11-04-1997? iii)Whether the sub-broker has contravened the relevant provisions of the code of conduct prescribed for sub-brokers under the Broker Regulations? 4.2I note that the charge against the sub-broker was that they connived with the promoters of the company by creating misleading appearance of trading in the scrip of NUPL thereby luring innocent investors to invest in the said scrip. Necessary facts relevant to the case are that, NUPL had advertised in some leading newspapers about the proposed buy-back of its shares.

I note that the investigations have revealed that a small part of the advertisement cost has been paid by the sub-broker and another entity called M/s. Havmore Financial Services Limited, an associate of the noticee. But the sub-broker has stated that the payments were made to the advertisement agency only for publishing their annual result which is mandated by the stock exchanges. This submission has not been corroborated by any documentary proof of publishing their annual result in the newspapers. The investigations have brought that Shri Kaplesh K. Chawalla was a director of Harvic and M/s. Havmore Financial Services Limited, Shri Hemang D. Jangla was a director of Harvic and M/s. Danhem Management Services and Shri Dinesh T. Jangla was director inHarvic and in M/s. Havmore Financial Services Limited.This would establish the link between the aforesaid entities. 4.3I note that prior to the advertisement by the company of their proposed buy-back, the traded volumes increased substantially from 1,50,000 shares to 3,50,000 whereas the price was stable between Rs.2.50/- and Rs.3/-. The sub-broker had started to trade in the scrip of the company during May, 2002 on instructions of Shri Harish Ruparel, promoter of the company.

The promoters of the company had transferred 16,30,000 shares to the account of the sub-broker from their associates, namely, M/s. Avdh Investment and Capital Private Limited, M/s. Numero Uno Credit Capital and Investment Private Limited, M/s. Numero Uno Securities Private Limited and Darshna Ruparel. From out of 16,30,000 shares obtained from the promoters of the company, the sub-broker in turn transferred 1,96,000 shares to their associates M/s. Havmore Financial Services Limited, M/s. Danhem Holdings and Shri Kerul Shah (stated to be an employee of the sub-broker) who sold the shares through various other brokers. I note that the sub-broker has done the above transfer instead of selling the shares as instructed by the promoters. The Enquiry Officer has observed that the sub-broker has transferred the shares of the company in order to escape detection and suspicion of concentration in the scrip. I, further note that these transfers enabled the group entities to engage in a series of transactions such as structured deals, that were intended to create artificial volumes and price in the scrip of NUPL.

The tables below would throw more light on how Harvic group entered into self deals within the group. (i) The table below give details of the transactions entered into between M/s. Havmore Financial Services Limited and M/s. Danhem Holdings on28-06-2002. Transactions between Havmore and Danhem on28/6/2002for 16000 shares Trade no Order no Broker No Qty Rate Buy/ Sell Date Time Counter broker Client code 554 32806100000003376 D0328 600 3.55 B 28-Jun-02 2:49:01 PM D0601 MMD007 555 32806100000003376 D0328 2200 3.55 B 28-Jun-02 2:49:01 PM D0601 MMD007 556 32806100000003376 D0328 2200 3.55 B 28-Jun-02 2:49:01 PM D0601 MMD007 557 32806100000003376 D0328 2200 3.55 B 28-Jun-02 2:49:01 PM D0601 MMD007 558 32806100000003376 D0328 2200 3.55 B 28-Jun-02 2:49:01 PM D0601 MMD007 559 32806100000003376 D0328 2200 3.55 B 28-Jun-02 2:49:01 PM D0601 MMD007 560 32806100000003376 D0328 2200 3.55 B 28-Jun-02 2:49:01 PM D0601 MMD007 561 32806100000003376 D0328 2200 3.55 B 28-Jun-02 2:49:01 PM D0601 MMD007 554 60100100010040000 D0601 600 3.55 S 28-Jun-02 2:49:01 PM D0328 7623 555 60100100010040000 D0601 2200 3.55 S 28-Jun-02 2:49:01 PM D0328 7623 556 60100100010040000 D0601 2200 3.55 S 28-Jun-02 2:49:01 PM D0328 7623 557 60100100010040000 D0601 2200 3.55 S 28-Jun-02 2:49:01 PM D0328 7623 558 60100100010040000 D0601 2200 3.55 S 28-Jun-02 2:49:01 PM D0328 7623 559 60100100010040000 D0601 2200 3.55 S 28-Jun-02 2:49:01 PM D0328 7623 560 60100100010040000 D0601 2200 3.55 S 28-Jun-02 2:49:01 PM D0328 7623 561 60100100010040000 D0601 2200 3.55 S 28-Jun-02 2:49:01 PM D0328 7623 From the above table it is evident that the transactions which were in the nature of cross/self deals and Havemore and Danhem (Harvic group) were buying and selling through different brokers.

It is seen that on28/6/2002, the Harvic group was buying and selling shares at the same time. The Client Code No. MMD007 belonged to client Danhem Holdings with Geojit Securities (broker No. DO328) and Client Code No. 7623 belonged to Havemore Financial with broker no. DO601- R D Shah. Total trade shares amounted to 16000 shares. Danhem was buying shares and at the same time Havemore was selling them the deals being self deals. (ii) The table below shows the transactions between Havemore and Kerul Shah entered on28/6/2002for 24000 shares Transactions between Havmore and Kerul Shah on28/6/2002for 24000 shares Trade no Order no Broker No Qty Rate Buy/ Sell Date Time Counter broker Client code 187 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 188 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 189 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 190 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 191 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 192 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 193 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 194 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 195 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 196 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 197 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 198 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 199 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 200 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 201 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 202 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 203 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 204 60101900000000299 D0601 1000 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 205 60101900000000299 D0601 1500 3.45 B 28-Jun-02 11:24:47 AM D0222 7623 187 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 188 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 189 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 190 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 191 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 192 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 193 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 194 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 195 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 196 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 197 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 198 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 199 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 200 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 201 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 202 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 203 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 204 22200100010041313 D0222 1000 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 205 22200100010041313 D0222 1500 3.45 S 28-Jun-02 11:24:47 AM D0601 K209 From the trade data it is seen that on28/6/2002, the Harvic group was buying and selling shares at the same time.

Client Code No. K209belonged to Harvic associated client Kerul Shah with broker No. 222 – G R Pandya.Client Code No. 7623 belonged to Havemore Financial with broker No. 601- R D Shah. Consecutive trades from Nos. 555 to 561 are observed in this specific transaction and the total trade was for 24000 shares. Havemore was buying the shares and at the same time, Kerul Shah was selling the shares, wherein the deals were self deals. From the data collated by the investigations, I find that a total of 40000 shares were traded at the same time between the entities in the Harvic group. This comprised around 8% of the total trading volumes. This volume on a relatively illiquid scrip such as NUPL is significant to arouse investor interest in the market. The table below brings out the volumes traded by the Harvic group and the total volume traded in the market. Date Qty of self deals Total Volume on the stock exchanges Percentage 9-May-02 3000 33582 8.95 15-May-02 30000 84655 35.45 17-May-02 40100 102789 39.05 24-May-02 3000 39025 7.70 5-Jun-02 3600 36607 9.85 Thus, as a result of such deals, artificial volumes were created by the Harvic group.

This was done to create trading interest in the scrip in addition to the trading interest generated by the advertisement by the company. Harvic group also indulged in large proprietary dealings in the shares of the company. Date-wise proprietary trading details of Harvic group (sub broker – Harvic, Havemore and Danhem) has been tabulated below for reference - Date Quantity Purchased Quantity Sold Exchange Volume on that day Percentage Purchase Percentage Sold 15.04.02 2000 0 6605 30.28 0.00 16.04.02 0 2000 7000 0.00 28.57 09.05.02 9291 5291 33582 27.67 15.76 10.05.02 2205 2205 32237 6.84 6.84 13.05.02 3000 3500 15932 18.83 21.97 14.05.02 21892 7595 49112 44.58 15.46 15.05.02 49605 34710 84665 58.59 41.00 16.05.02 58089 36010 66599 87.22 54.07 17.05.02 43350 59545 102789 42.17 57.93 20.05.02 16812 11668 25872 64.98 45.10 21.05.02 1900 0 5050 37.62 0 22.05.02 13945 18035 29380 47.46 61.39 23.05.02 11615 6315 17430 66.64 36.23 24.05.02 17800 17800 39025 45.61 45.61 27.05.02 3945 3610 6365 61.98 56.72 28.05.02 6810 2700 12510 54.44 21.58 29.05.02 5240 2020 8240 63.59 24.51 30.05.02 5830 4500 10840 53.78 41.51 31.05.02 7300 44300 56500 12.92 78.41 03.06.02 6610 11024 21830 30.28 50.50 04.06.02 28770 4610 60620 47.46 7.60 05.06.02 10300 10300 36607 28.14 28.14 06.06.02 10540 10540 25944 40.63 40.63 07.06.02 29000 22900 79500 36.48 28.81 10.06.02 65086 53043 149695 43.48 35.43 11.06.02 155465 133063 243816 63.76 54.58 12.06.02 93560 87410 156470 59.79 55.86 13.06.02 42265 47381 108720 38.88 43.58 14.06.02 46350 46350 126550 36.63 36.63 17.06.02 77500 60100 173500 44.67 34.64 18.06.02 98721 76035 170272 57.98 44.66 19.06.02 53590 81266 161310 33.22 50.38 20.06.02 36300 46300 120160 30.21 38.53 21.06.02 59880 62550 185580 32.27 33.71 24.06.02 23645 16160 94470 25.03 17.11 25.06.02 49510 31400 222765 22.23 14.10 26.06.02 49050 33950 129500 37.88 26.22 27.06.02 12700 10300 74500 17.05 13.83 28.06.02 150300 132275 535725 28.06 24.69 01.07.02 129450 149370 261820 49.44 57.05 02.07.02 147126 135251 394577 37.29 34.28 03.07.02 216127 193053 391255 55.24 49.34 04.07.02 482066 383604 1013064 47.58 37.87 05.07.02 290474 403785 1013572 28.66 39.84 08.07.02 6799 2000 243804 2.79 0.82 09.07.02 66073 46841 200665 32.93 23.34 10.07.02 499350 490850 1095600 45.58 44.80 11.07.02 364182 396713 895049 40.69 44.32 12.07.02 55839 55839 481847 11.59 11.59 15.07.02 9530 5900 42080 22.65 14.02 16.07.02 64625 18455 237885 27.17 7.76 17.07.02 7400 40090 90960 8.14 44.07 18.07.02 16663 9900 69153 24.10 14.32 19.07.02 16600 3400 37950 43.74 8.96 22.07.02 1305 77318 90618 1.44 85.32 26.07.02 10900 0 22500 48.44 0.00 It can be seen from the above that the dealings of the group were considerable when compared with the volumes traded on the exchange.Harvic group purchases were as high as around 88% and sales were as high as 85% of total exchange traded volume.

On other dates as well, both purchase and sale quantities comprised a significant quantity of stock exchanges volumes. I find that the Harvic group had thus generated volume in the scrip in order to facilitate or create an artificial market for selling shares of the company. 4.4I have also taken note of the deposition of Shri Kalpesh Chawalla, Director of the sub-broker, who testified that he had on certain occasions entered into cross deals and that he had also placed a sell order through one broker and bought the same through another. On a perusal of the trade data of the scrip, it is evident that Harvic group (comprising the sub-broker, Havmore Financials, Kerul Shah and Danhem) was involved in buying and selling the shares of NUPL at the same time. I note that the Enquiry Officer had observed that a total of 40,000 shares were traded at the same time among the Harvic group which comprised about 8% of the total trading volumes. It was also observed that such concentrated trading in relatively less liquid scrip was significant. I am in full agreement with the finding of the Enquiry Officer that such deals were created by the Harvic group only to give a false impression of trading and to increase the attractiveness of the price of NUPL shares, when it had advertised about the proposed buy-back.

I also note that the Enquiry Officer had observed that the trades were squared off which resulted in nil deliveries. The manner of trading by the Harvic group would prove that the trades were not in any ordinary course but structured so as to give a false picture of actual trading in the scrip of the company. The creation of artificial volumes also was intended to facilitate the promoters to off load their stake easily. 4.5I also note that the Harvic group had entered into certain proprietary trades duringApril 1, 2002toAugust 1, 2002through Shri Kerul Shah (employee of the sub-broker) and Shri Sandeep Sakpal and such trades also contributed to the creation of artificial volumes in the scrip. Trades of these two persons were entered through another sub-broker called My Money Investments (affiliated to JHP Securities). The findings reveal that Shri Kerul Shah was introduced by M/s. Havmore Financial, one of the associates of the sub-broker and Shri Kerul Shah had in turn introduced Shri Sandeep Sakpal to My Money Investments. I note that Shri Sandeep Sakpal had also squared off his trades.

The table below would indicate the trades that were squared off. Date Gross Buy Gross sales Buy % to stock exchanges volume sales % to stock exchanges volume 13/06/2002 13000 13000 12.0% 12.0% 14/06/2002 10000 10000 7.9% 7.9% 17/06/2002 12000 12000 6.9% 6.9% 20/06/2002 9000 9000 7.5% 7.5% 21/06/2002 10000 10000 5.4% 5.4% 26/06/2002 15700 15700 12.1% 12.1% 28/06/2002 40000 40000 7.5% 7.5% 01/07/2002 25200 25200 9.6% 9.6% 02/07/2002 18800 23600 4.8% 6.0% 03/07/2002 47249 47249 12.1% 12.1% 04/07/2002 146000 146000 14.4% 14.4% 05/07/2002 118220 118220 11.7% 11.7% 08/07/2002 106778 106778 43.8% 43.8% 09/07/2002 11400 11400 5.7% 5.7% 10/07/2002 166100 166100 15.2% 15.2% 11/07/2002 105300 105300 11.8% 11.8% It is seen from the above that transactions are in the nature of squaring off. No delivery of shares has been taken. These transactions comprised a significant percentage of stock exchanges volume on those dates. The client agreement form of Shri Kerul Shah with My Money brings out that Shri Kerul Shah was introduced by Havemore itself. Further, Shri Kerul Shah had introduced the client, Shri Sandeep Sakpal to My Money.

This act of introducing Shri Sandeep Sakpal would prove the nexus between the two. Shri Sakpal traded to the extent of purchase of 783527 shares and sale of 783127 shares and his transactions were in the nature of squaring off. I note that Harvic group had admitted that they knew Shri Bipin Dewani – owner of My Money Investments. The findings as brought out above would indicate that the Harvic group used M/s. My Money Investments for creating artificial volumes and helping in offloading promoter sales. 4.6It is also noted that the client registration form of Darshana Ruparel is not complete. This is the same for clients, Avdh Investments, Numero Uno Securities, Numero Uno Credit Capital and Shri Mayur Jadeja. The Enquiry officer has also observed that the sub-broker has not paid the entire sale consideration to the promoter group of NUPL and that an amount of Rs.9.67 Lakh was still outstanding. The sub-broker has also admitted errors while punching orders for its clients and not fulfilling the ‘KYC’ requirements properly. 4.7The sub-broker, by conniving with his associate group has dealt in the scrip thereby manipulating it, so as to create a false appearance of trading in the scrip, which act amounts to fraudulent and unfair practice prohibited by the SEBI Act, 1992 and the provisions of Regulation 4(b) and 4(d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995. The sub-broker has also traded in scrip without any intention to effect transfer of beneficial ownership.

Thus, I find that the sub-broker has contravened the provisions of Clause (b) and (d) of Regulation 4 SEBI (Prohibition of Unfair and Fraudulent Trade Practice relating to Securities Market) Regulations, 1995. 4.8The sub-broker by accepting incomplete client registration forms for some of their clients (M/s. Darshana Ruparel, AVDH Investments, Numero Uno Securities, Numero Uno Credit Capital, Mayur Jadeja) has failed to exercise due care and diligence expected of a sub-broker. The code of conduct prescribed for sub-brokers requires that the sub-broker shall not indulge in manipulative, fraudulent or deceptive transactions which the sub-broker has breached by conniving with its associate group in manipulating so as to create a false appearance of trading in the scrip. The rules of conduct also prescribe that a sub-broker shall not create false market or indulge in any act detrimental to public interest. Thus I find that the sub-broker has contravened Clauses A (1) and (2), B (8) and D (4) and (5) of the Code of Conduct prescribed for sub-brokers in SEBI (Stock Broker and Sub-broker) Regulations, 1992. 4.9The notice issued under Regulation 6(1) of the “Enquiry Regulations’ also alleges that the sub-broker has contravened SEBI Circular SMD/POLICY/CIRCULAR/5-97 dated11-04-1997.

This circular prescribes a standard format for Client - Registration Form and the Member - Client Agreement. The circular also prescribed that in case of a small investor, an exemption may be made for the Annual Income, Income Tax No. and Market Value of Portfolio details in the Individual Client Registration Application Form, in cases where the Annual Gross Turnover (i.e. Purchases + Sales of securities) of the client is not more than Rs. 500,000/- (Rupees Five Lakhs). But there is no finding with respect to the status of the investor for whom the client registration form was incomplete. Even assuming that the investor was a small investor, still the sub-broker has failed to collect the other relevant details like the name of introducer, demat account details etc. Since there is no finding by the Enquiry Officer with respect to the same, I do not wish to delve further. 4.10In the result, I find that the sub-broker has contravened the legal provisions mentioned supra and thus have no reasons to differ from the findings of the Enquiry Officer. I find that the penalty of 2 months on M/s Harvic Management Services I Ltd., would meet ends of justice.

5.0ORDER 5.1Therefore, in exercise of powers conferred upon me in terms of Section 19 of the SEBI Act, 1992 and Regulation 13(4) SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, I hereby direct that the registration granted to the sub-broker M/s. Harvic Management Services India Limited (PAN – AABCH1644M), SEBI Registration No. INS 010496938affiliated to M/S. B. M. Gandhi Securities Ltd., Member, Bombay Stock Exchange Ltd., Mumbai, be suspended for a period of 2 months. The said penalty shall be operative from the expiry of 21 days from the date of this order. PLACE: MUMBAI T C NAIR DATE: ­­­­­­­23.08.2007 WHOLE TIME MEMBER