Markets regulator Sebi today warned SMC Global Securities to be "cautious" in future while carrying out stock broking activity.
A probe conducted by Sebi in the share trading of Gangotri Textiles during April-May 2006 found that Sam Global Securities, which later merged with SMC Global Securities, failed to exercise due diligence while entering into trades on behalf of its client ISF Securities.
Sam Global Securities had merged with SMC Global Securities with effect from January 1, 2008. Therefore, SMC stands as legal successor to Sam Global, the regulator said.
In an order passed today, Sebi has warned "SMC Global Securities to exercise caution, care and due diligence in its future conduct while entering into trades on behalf of its clients and in compliance with the mandate of stock brokers regulations".
Sebi said there was no evidence that the broker was part part of Vishvas Group, which allegedly aided and abetted in illegal synchronised trades in Gangotri Textiles' shares in violation of the Prohibition of Fraudulent and Unfair Trade Practices (PFTUP) regulation.
"There is no evidence of substantial contribution to price manipulation through the trades executed by Sam Global for its client ISF," Sebi said.
However, it said that persistence of trading by ISF and proximity of time between orders in a scrip which was otherwise illiquid should probably have raised red flag, it added.
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