Sep 10, 2004
Orders : Orders of Chairman/Members
SECURITIES AND EXCHANGE BOARD OF INDIA
Under Section 11B and 11(4)(b) of Securities and Exchange Board of India Act, 1992 against Shri Krishna Hullatti ( alias) Hullatti Krishna B (alias) krishnaraj, proprietor of M/s Matrix Web.
(1) It has come to the notice of Securities and Exchange Board of India(SEBI) about certain advertisements placed by one Shri. Krishnaraj with contact Telephone & Mobile Numbers 26529420 & 9448061029 wherein, the advertiser has solicited business from the public informing them to buy any shares at any rate and to get 50% free shares duly illustrating as “buy 100 shares get 150 shares” and has also informed the public about availability of many more profitable schemes. The said advertiser had also advertised inviting the public to invest money(in safe) like mutual fund for more and regular returns and had provided the contact Numbers as Krishnaraj – 26529420/9448061029. On further enquiries, it has come to the notice of SEBI that the advertiser is one Shri. Krishna Hullatti, Proprietor of M/s Matrix Web and is operating from No.92, Dr. Masti Venkatesh Iyengar Road, 2nd Cross, Gavipuram Extension, Hanumantha Nagar, Bangalore 560 019, who actually deals with the investing public. It has further come to our notice that the said Shri. Krihna Hullatti, maintains an exclusive Client registration forms for each of the clients who would be interested in investing their money with him for dealing in the capital market.
(2) It is observed that neither the said Shri. Krishna Hullatti nor his firm M/s Matrix Web is registered with SEBI in any capacity either as a Stock Broker or as a Sub-broker or as a Portfolio Manager to deal with the public in the capital Market on their behalf and has only registered himself as a client with two Stock Brokers Viz: Sushil Stock Brokers P Ltd, India Bulls Securities Ltd, with Client Codes SKOKH1, 19944 and with another stock broker -ICICI Web trade in the name and style of Hullatti Krishna B with client code 8500271043 with the aforesaid contact address. By such registration as a client with the stock brokers, the said individual has no authority or permission to in turn deal with clients in the capital market.
(3) It is observed that the nature of dealings of the said individual with the clients is such that he would collect amounts from investors towards purchase of shares (for e.g. 100 shares) of their choice and the individual would buy one and half times the shares ( 150 shares) ordered by the investor. No deliveries would be effected to the clients and the same would be retained in his own account. A receipt is being issued by the individual in the name of his firm Viz: M/s Matrix Web duly signed by him acknowledging the receipt of amount towards cost of 100 shares from the client and also stating specifically the purchase of 150 quantity of the specific shares ordered by the client. The client can also sell the entire shares (150) at any time and take back profit on those shares along with the amount paid for 100 shares. However, in actual practice, the client does not know the actual quantity of shares purchased by the individual as no delivery is being effected. In the event of sale of the shares by the client, the individual works out the difference between the original purchase price and the sale price, applies the difference (profit or loss as the case may be) to the 150% of shares supposed to have been bought by him and the same is paid to the client after deducting a certain sum as brokerage and also an interest for the period of retention of the shares by him on behalf of the clients until the sale.
In the first place, the aforesaid activity of the individual is totally illegal as he is not registered with SEBI to carry on any activity either as a Portfolio Manager or as a Stock broker / sub broker or in any other capacity as a market intermediary. Secondly, no authentic and legally binding documents are issued to the clients indicating the Order No/ Trade No., Order quantity, rate of contract etc towards fulfillment of his obligations / enforcement of the rights of the clients on him. Further, as the said individual is not registered with SEBI to act in the Capital market on behalf of clients in any capacity, in the event of the individual failing to meet his obligations to the investors, the normal recourse available to the investors while trading with a registered intermediary may not be available in this case.
(4) From the foregoing it is only apparent that the said individual without any registration from SEBI to act in the capacity of a Stock broker or a Sub-broker or as a Portfolio Manager is acting on behalf of the investing public in the Capital Market in buying and selling of shares for them and luring the investors with a promise of huge returns and only profits. It is needless to state that such an activity is not only illegal but also fraught with huge risks and would be detrimental to the financial interests of the unsuspecting investors. Hence, it is imperative to restrain the said individual from dealing further with the Public in the Capital Market transactions, in the interest of the investors and the Securities market.
(5) In view of the grave emergency to save the investors and the securities market from further acts of Shri Krishna Hullatti (alias) Hullatti Krishna B (alias) Krishnaraj, proprietor of M/s Matrix Web, I , in exercise of the powers conferred upon me under Section 4(3) of the SEBI Act, 1992 read with Section 11B and 11(4)(b), hereby direct Shri Krishna Hullatti (alias) Hullatti Krishna B (alias) Krishnaraj, proprietor of M/s Matrix Web, having his address at No.92, Dr. Masti Venkatesh Iyengar Road, 2nd Cross, Gavipura Extension, Hanumanthanagar, Bangalore 560 019 not to buy, sell or deal in securities, in any manner, directly or indirectly and not to accept any loans or deposits intended for share market, from the public with immediate effect, till further orders. He may file his objections, if any, to this order within a period of 15 days from the date hereof and also avail hearing , if he so desires, failing which it shall be presumed that he has nothing to say in the matter .
(6) This order shall come into force with immediate effect.
G N BAJPAI
Date: 10 September. 2004
SECURITIES AND EXCHANGE BOARD OF INDIA