Sebi today let off SDFC Securities Ltd with a warning to be "careful and cautious" with respect to its broker activities as further lapses would attract stringent action.
The case relates to fraudulent dealings in shares of Vision Organics shares, back in 2001.
Securities and Exchange Board of India (Sebi) probe found that SDFC Securities trades, executed through the broker terminal, had created a false and misleading appearance of trading in scrip of the company.
"I am of the view that the noticee has facilitated the clients to execute structured and cross deals which created a false and misleading appearance of trading in the scrip," Sebi whole-time member S Raman said in a ruling today.
Raman also said that SDFC Securities had "failed to exercise due care and diligence" as required by a broker.
However, he noted that the case pertained to transactions that took place in 2001, which was almost 14 years ago.
"The other main parties involved have been allowed to conclude their cases in consent proceedings or have been let off with administrative warning," Raman said.
"Considering all these facts and the circumstances of the case in totality, I am of the view that it would meet the ends of justice if a strong warning is issued to the Noticee for executing trades on behalf of its clients..." he added.
Accordingly, he has warned the broker "to be careful and cautious as regards the conduct of its business and to adhere to and comply with all the statutory provisions while carrying out its activities in the securities market.
"Any future lapse on its part in complying with the legal provisions shall invite stringent action".
Sebi had conducted an investigation into the dealings in the shares of Vision Organics during the period from July 9, 2001 to November 9, 2001.
It was alleged that the trading members transacted in the scrip of the company with a view to creating an artificial market in the illiquid scrip and to create artificial price rise by entering into structured and cross deals.
