Court uphelds Sebi order

The Mumbai High Court has vacated the interim stay on a Sebi order which barred three brokerages from undertaking fresh business till the pendency of the inquiry into alleged price manipulation by them. The division bench, comprising Justice A Agarwal and Justice S S Parkar, has, however, allowed these brokerages to trade for a period of four weeks in all scrips except the ones in which they have been accused of manipulation. This relief has been granted to allow the petitioners to appeal before the Supreme Court. The three brokerages are Harvest Deal Securities, RR Bohra and Mahico Private Limited When contacted, Sebi officials said there stand has been vindicated by the High Court which has upheld its order. The bench has admitted the petition and will in due course give its verdict on the petitioners’ plea that Sebi’s action of passing interim orders of this kind under Section 11B were against the principles of natural justice and violated the fundamental rights of the concerned brokers. Inits verdict pronounced on Saturday, the bench observed that the ad-interim order passed by the high court on November 1, and then continued on November 3, is vacated. However, the order of the court is stayed for a period of four weeks during which the three brokerages in question will not be allowed to trade in the scrips where they have been charged for price manipulation. While the scrips – Sterlite Industries, BPL and Videocon International – are common to all the three brokers, in the case of Harvest Deal Securities, where BSE vice-president Rajendra Banthia is the main director, it also includes Nedungadi Bank. The brokers whose terminals had earlier been deactivated by the Bombay Stock Exchange (BSE) will, however, not be able to derive any benefit from the current order of the court. Two other brokers, had mid-way through the hearings, filed their appeals as well. These brokers’ terminals had been deactivated in June itself. The three brokers had last Sunday obtained a stay from the vacationjudge. The stay had continued during the pendency of the admission petition before the division bench. In an affidavit, Sebi justified its action against the brokers on the ground that the directive was interim in nature and issued to prevent yet another scam. Show cause notices had been issued to the brokers and their explanations sought after it was prima facie established that they had indulged in rigging of share prices at the behest of Harshad Mehta. Harshad grilled for price rigging MUMBAI Securities scam-accused, Harshad Mehta, was summoned by the Securities and Exchange Board of India (Sebi) in connection with the case of price manipulation in three blue-chip scrips that eventually led to payment crisis at the Bombay Stock Exchange (BSE). Sebi officials, however, declined to comment as investigations were still in progress. Mehta was summoned earlier in connection with a case of price rigging in the scrips of BPL, Videocon International and Sterlite Industries. Investigations into theabnormal price movements of these scrips, prima facie revealed that Mehta manipulated prices through a set of front companies. These companies, acting in concert, cornered huge quantities of floating stock of these scrips thereby disturbing the market equilibrium and creating an artificial market.