INDIA BUSINESS WORLD - DECEMBER 16th - DECEMBER 31st
- 2007
SEBI MOVES SUPREME COURT ON BAJAJ RULING
The Securities & Exchange Board of India (Sebi) has moved the Supreme Court challenging the Special Appellate Tribunal ruling which set aside its order debarring Harinarayan Bajaj and Rahul H Bajaj from dealing in the capital market and securities market. On Oct 10, the tribunal had set aside Sebi's order banning them from trading in the capital market for five years and securities markets for ten years for allegedly committing irregularities.
"The tribunal has grossly erred in concluding that there is no bar on the practice carried out by the respondents (Harinarayan Bajaj and Rahul Bajaj) viz shifting positions from one exchange to the other merely because there is no provision either in the act (Sebi Act, 1992) or in any of its regulations or circulars. The tribunal had failed to appreciate that the appellant (Sebi), being a regulator, would have to take action against any practice that is against the interest of investors by taking such measures as it deems fit, in discharge of its duty", said Sebi in its appeal filed through M/S KJ John & co.
Such an order was illegal as the tribunal failed to appreciate that the manipulative intent of a trader has to be garnered from the manner of trades executed by him. Upon a scrutiny of the pattern followed by the two in shifting their trades from one exchange to another, such intention was clearly discernible, said Sebi.
It is said that the investigation had revealed that the respondents had made huge purchases in the scrip of Amara Raja Batteries (ARBL). Between Aug 2000 and Feb 2001, they had taken delivery of approx 3, 76,260 shares of ARBL of which 2, 93,550 shares were pledged with banks and other individuals to avail loans for utilising it to fuel stock prices, said Sebi.
They were also making use of different trading cycles in BSE and NSE to shift position from one exchange leading to creation of price differential which prompted arbitrage activity. On June 25, 2003, Sebi had passed an order prohibiting Bajaj's from trading in such markets.
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