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Bombay HC upholds SEBI's power to ban brokers in price rigging case

A division bench of the Bombay high court comprising Justice Ashok Agarwal and Justice S S Parkar today upheld the Securities and Exchange Board of India's power to place ban on three brokers, who were allegedly involved in price rigging of scrips.

The court, however, allowed them to trade, except for scrips of BPL, Videocon and Sterlite, till the time an appeal is filed in the Supreme Court. The court has given four weeks time to file an appeal.

The broking firms involved are: Harvest Deal, owned by BSE vice president Rajendra Banthia, Mahico and partner, and R R Bohra.

The court also vacated the ad interim stay. The firms filed a petition in the court challenging the SEBI's order from preventing them trading in the market.

On October 30, through an order, the SEBI had banned 18 stockbrokers including these three till enquiry proceedings into price manipulation of Videocon International, BPL and Sterlite Industries scrips were completed.

The SEBI had said in its order that it had gathered ''enough prima-facie evidence'' to support allegations that 18 brokers acted in concert with erstwhile big bull Harshad Mehta to rig prices of these scrips.

The three brokers were granted an 'ex parte' stay order on November 2, when they moved court, challenging the order of the SEBI debarring them from operations at the same time. The court admitted the SEBI's affidavit against the stay order granted to the three brokers including BSE vice-president Rajendra Bhantia's firm Harvest Deal Securities and two other stockbrokers.

The stay was extended on Thursday when a stockbroker Jasmin Shah sought intervention into the matter. The SEBI repeatedly pleaded strongly in the court that it has taken stern action only to protect the investors interest. The regulatory board has also clarified that it has only asked deactivation of their terminals till the enquiry proceedings are completed and neither a suspension nor a permanent discontinuation of their trading on the bourses.

Out of the 18 brokers whom the SEBI has initiated action, 12 brokerages are on the BSE and six on the NSE.

It was also the first time since the 1992 secuirities scam that the SEBI has directly put blame on alleged securities scamster Harshad Mehta.

UNI

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