Sebi clamps down on Magadh bourse

The Securities and Exchange Board of India (Sebi) has directed Magadh Stock Exchange Association (MSEA) not to assist, regulate or control the dealings in securities in any manner till further directions or pending completion of the final proceedings in the case relating to manipulation of trading in Bhoruka Financial Services (BFSL).

The regulator also suspended transactions in BFSL stock on the Bangalore Stock Exchange, where it is listed, and any other stock exchange. Besides, the shares of BFSL in the custody of Central Depository Services (CDSL) have been impounded.

"Prima facie it was found that the member of the MSEA, namely Rajat Share & Stock Borker, facilitated the above transactions illegally on the MSEA and without following know your client (KYC) criteria. The broking firm was directed not to deal in securities and undertaking any transactions in securities.

The acquirer of the stocks, DLF Commercial Developers, was also prohibited from dealing in BFSL stock as long as these directions are in force.

Besides the regulator has prima facie found the promoters of BFSL - Satyanarayan Agrawal, Viveek Agrawal, Umah Agrawal, Siddhartha Agrawal, Satyanarayanan Vivek Kumar HUF, s Prabhu Securities and Bhoruka Engineering - have gained unfairly, and directed them to deposit the proceeds of these transactions in an escrow account with a nationalised bank.

MSEA's officiating executive director C M Pandey has been suspended and prohibited from acting in any capacity in the exchange and any institution related with the securities market, owing to his "unseemly" conduct in dealing with the transaction.