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Vivek Law
Mumbai, Nov 5: Market regulator SEBI has charged Bombay Stock Exchange vice-president Rajendra Banthia with rigging the price of the Nedungadi Bank scrip. The regulator has initiated inquiry proceedings against Banthia.
Banthia had been debarred from trading till the pendency of the inquiry into his alleged role in the Nedungadi Bank case along with the BPL, Sterlite and Videocon International price-manipulation case.
Banthia has moved the Mumbia high court against the SEBI dictate. The court, however, has stayed the SEBI order till the pendency of the proceedings.
The SEBI affidavit, filed before the Mumbai high court, shows that Banthia was not only charged for manipulating the BPL, Sterlite and Videocon scrips' prices, but also in Nedungadi Bank.
Sources said the SEBI order debarring Banthia from trading under Section 11B of the SEBI Act, was common to both the cases, as they had been investigated around the same time.
In Nedungadi Bank's case, investigations have revealed that Banthia, adirector in Harvest Deal Securities, indulged in "fictitious" transactions and also rigged the prices of the scrip, states the SEBI affidavit.
On the Sterlite, BPL and Videocon price-rigging case, the SEBI affidavit says Banthia shared his business premises with First Custodian Fund India Ltd, an NSE member, and Shrikant Mantri, a BSE member and a close associate of Banthia.
Banthia's transactions for the common clients (the seven investment companies alleged by SEBI to be front companies of Harshad Mehta) were routed through Archana Investments. The proprietor of Archana Investments is the father of a former employee of Banthia. Shrikant Mantri, had, according to the SEBI affidavit, exchanged "kaplis" for Archana Investment in the account of the common clients.
SEBI had on October 30 debarred 18 brokers from trading for their alleged involvement in BPL, Videocon and BPL scrips' price-rigging, which led to the infamous payments crisis in June, this year.
The brokers had been charged for having workedin conjunction with seven investment companies in rigging the prices of these scrips.
Three brokers, including Banthia's Harvest Deal Securities, had obtained a stay a day after the SEBI order from the vacation judge of the Mumbai high court. They subsequently filed a writ petition before the court on November 2.
The matter was adjourned as SEBI had sought time to file its affidavit. In its affidavit, SEBI has contended that its directions preventing the brokers not to undertake fresh orders do not tantamount to the regulator asking these entities to close down their businesses.
It has also refuted the charge that SEBI has no powers to issue directions pending the inquiry. The regulator has clarified that the brokers can continue to act as members of the exchange till such time their registration is suspended or cancelled after the inquiry.
The brokers can continue to do business like underwriting, depository participant or custodian, if they are holding registration for these.
The SEBI has alsosubmitted that an order passed under the act or the regulations can be appealed against before the central government under Section 20 of the SEBI Act.
The regulator has contended that the petitioner was well aware of the fact SEBI had commenced investigations of these views. The petitioner, Banthia, had appeared before the investigating officer. His statement was also recorded which shows that the petitioner had been given an opportunity to present their version, SEBI has said.
Hearing Adjourned
The Mumbai high court adjourned till Friday hearing on the petition filed by three brokers challenging the SEBI verdict debarring them from trading till the pendency of an inquiry into their alleged role in the price- manipulation case.
The hearing was adjourned after the counsel for Jasmin Shah, an investor who had earlier filed a case in this matter, said he, too, should be allowed to file an application, as it was because of him that the regulator had initiated the investigations and hence the twocases were linked.
This was opposed by the brokers' counsel on the grounds that this case had nothing to do with the earlier one. Meanwhile, another two brokers, RR Mohta and SS Nangalia, also filed petitions before the court challenging the SEBI verdict.
The division bench comprising Justice A Agarwal and Justice SS Parkar adjourned the matter till Friday by when Jasmin Shah is expected to file his application.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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