Mumbai: SEBI Tuesday directed one stock broker, Ashok Kumar Kayan to "strictly comply" with the securities market laws, following his alleged fraudulent activities in shares of Bakra Pratisthan.
"...Hereby issue warning to the noticee Ashok Kumar Kayan, member of the Calcutta Stock Exchange Ltd...Further direct the noticee to strictly comply with the securities laws and other requirements which govern its conduct in the securities market," SEBI said in its order dated December 31.
The matter relates to SEBI's probe in shares of Bakra Pratisthan from January 1, 2004 to March 31, 2005.
The probe revealed that the share prices of the company had witnessed a phenomenal rise during the probe period.
SEBI found that four stock brokers including Kayan had traded substantially in the shares of the company and their cumulative trades accounted for 85 percent of the total volumes traded in the said scrip.
It was alleged that the entire 5.35 lakh shares traded (both buy and sell) by Kayan were cross deals wherein he was both buying broker as well as the selling broker.
The trades were client to client trades created on a single terminal. Both buy and sell orders were done either in identical time or within a gap of few seconds.
The clients were allowed to place buy and sell orders of same quantity at the same price which led to the creation of artificial volume leading to price rise of the scrip.
SEBI had therefore alleged Kayan of creating artificial volume and influencing the price of the shares.
Subsequently, a report by the SEBI's enquiry officer found no "corroborative material" to establish allegation of manipulation by Kayan.
However, it said that Kayan was expected to be diligent and use required skill and care while acting as a broker.
Based on its findings the report recommended a warning to Kayan, which was agreed upon by SEBI.