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Sebi to probe 2 brokers in TFL insider trading case

BS Markets Bureau in Mumbai

The Securities and Exchange Board of India has proposed to initiate enquiry proceedings against stock brokers Jhunjhunwala Stock Brokers Pvt Ltd and Malini Sanghvi Securities Pvt Ltd for violation of code of conduct of stock brokers and sub-brokers, insider trading and fraudulent and unfair trade practices.

Sebi in its investigation report on insider trading allegations against Dilip Pendse, former managing director of Tata Finance, has found prima facie evidence against these brokers for aiding the back dating of transactions of sale of 290,000 TFL shares.

The Sebi report states: "The transaction of 290,000 shares of Tata Finance was not done on the exchange nor in accordance with the provisions of the Securities Contract Regulation Act and prosecution under the Act should be initiated."

On page 81 of its report, Sebi has stated that "Enquiry proceedings may be initiated against JSBPL and MSSPL for violation of clause A (1), (3) and (5) and clause B (1) and (2) of schedule II of code of conduct for stock brokers under regulation 7 of Sebi (stock brokers and sub-brokers) regulations, 1992 read with regulation 4 of Sebi (Insider Trading) regulation, 1992 and regulation 11 of Sebi (Prohibition of fraudulent and unfair trade practices relation to securities market) Regulations, 1995.

Sebi has stated that the off market transactions for 290,000 shares of TFL actually happened during March 28 to 30, 2001 and not during September 11 and 13, 2000 as contended by the brokers.

JSBPL and MSSPL had aided, assisted and abetted Anuradha Pendse, Nalini Properties Pvt Ltd, Anjudi Properties Pvt Ltd, and Anjali Beke in insider trading and causing wrongful loss to India Emerging Companies Investment Ltd and Sarjan Securities.

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