SEBI suspends two broking entities for misleading investors

SEBI suspended registration of Rajkumar C Basantani and Kolar Sharex for allegedly misleading investors

Mumbai, Aug 30 (PTI) Market regulator Securities and Exchange Board of India (SEBI) has suspended the registration of two stock brokers for making false statements regarding issue of bonus shares of Soundcraft Industries in an alleged attempt to mislead the investors.
In separate orders, SEBI said it has suspended broker Rajkumar C Basantani, also Soundcraft Industries Ltd (SIL) promoter and chairman, for one year while brokerage firm Kolar Sharex for three months. Basantani and Kolar Sharex are registered with NSE and BSE, respectively.
The regulator, passed the two orders yesterday, after an investigation into complaints of irregularities against Soundcraft Industries as well as its promoters. The probe looked at the trading of SIL shares between 3 December 2003 to 17 August 2004 to ascertain possible violations.
During this period, the entities related to SIL or the brokers had offloaded 1.02 crore shares of the company on NSE.
SEBI found that Basantani made an announcement of bonus shares to its shareholders on 5 December 2003 and the same was approved by its shareholders on 31 December 2003.
However, SIL failed to dispatch certificates related to bonus shares. Later, when the confirmation about the dispatch of shares was sought from SIL, the company was found closed.
According to SEBI, the Serious Fraud Investigation Office (SFIO) also confirmed that physical share certificates relating to bonus shares were not dispatched.
Thus, the investors who had bought shares of SIL were cheated, at a time when the company was on the verge of closure, the fact which was known to Basantani and Kolar Sharexe and not to common investors.
The regulator said that Kolar Sharex was "instrumental in aiding and abetting SIL and Basantani in making false and misleading announcements which were inherently fraudulent, deceptive and manipulative and intended to induce investors to invest in the scrip of a loss making company." 
"Such device was orchestrated Rajkumar C Basantani who is promoter/director of the noticee (Kolar Sharex)to ensure that entities related to Rajkumar C Basantani/SIL could take advantage of the gullibility of the defrauded investors and offloaded their shares in the market," SEBI said in its order.
Prior to the announcement of bonus issue, shares of SIL were last traded on NSE on 9 September 2003.
After the false announcement of bonus shares by SIL, the trading activity in the scrip rose.


Airtel asked to pay Rs15,000 for 'abrupt' disconnection of call services

Airtel disconnected incoming and outgoing calls on the number of its subscriber for 24 days and was asked to pay Rs10,000 towards compensation for mental and physical harassment and Rs5,000 as cost of litigation

New Delhi: Telecom operator Airtel has been directed by a consumer forum to pay Rs15,000 to a subscriber as compensation for 'harassing' him by abruptly disconnecting call services on his number for 24 days, reports PTI.


Airtel had disconnected incoming and outgoing calls on the number of its subscriber, Delhi resident JC Shivran, on the ground that he had not re-verified his contact details.


"The action taken by the opposite party (Airtel) of disconnection of the call facilities on the complainant's (Shivran) mobile phone appears to be unjustified... The action of abrupt disconnection of incoming and outgoing facilities does not appear to be proper and reasonable.


"Undoubtedly, the complainant has suffered from mental and physical harassment for which he is entitled to be reasonably compensated. We, therefore, direct the opposite party to pay Rs10,000 to him towards compensation for his mental and physical harassment along with Rs5,000 as cost of litigation," the South West District Consumer Disputes Redressal Forum said.


RBI asks urban co-op banks to modify forms for fixed deposits

Banks will have to incorporate a clause in the FD form to give option of premature withdrawal by survivor in case of death of the other joint account holder

Mumbai: The Reserve Bank of India has asked the urban co-operative banks to modify fixed deposit (FD) account opening form to allow pre-mature withdrawal in the event of death of one of the joint account holders without any penalty, reports PTI.
Under the modified norms, it would be easier for the surviving joint account holders of FD with 'either or survivor' or 'former or survivor' mandate to go in for pre-mature withdrawal of fixed deposit in the event of death of the other.
As per the notification of the Reserve Bank of India (RBI), banks will have to incorporate a clause in the FD form to give option of premature withdrawal by survivor in case of death of the other joint account holder.
RBI had earlier asked UCBs to incorporate such a clause in the account opening form, however, it said, "UCBs which have neither incorporated such a clause in the account opening form nor taken adequate measures to make the customers aware of the facility of such mandate, cause unnecessary inconvenience to the 'surviving' deposit account holders(s).
"UCBs are, therefore, advised to invariably incorporate the aforesaid clause in the account opening form and also inform their existing as well as future term deposit holders about the availability of such an option." 
The joint deposit holders may be permitted to give the mandate either at the time of placing fixed deposit or anytime subsequently during the term/tenure of the deposit.
"If such a mandate is obtained, banks can allow pre-mature withdrawal of term/fixed deposits by the surviving depositor without seeking the concurrence of the legal heirs of the deceased joint deposit holder," RBI said.
It further clarified that "such premature withdrawal would not attract any penal charge".


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