Securities and Exchange Board of India (Sebi) noted that SVS Securities had failed to exercise due skill, care and diligence regarding transactions executed by its sub-broker, Aquarian Share Broker Co, through it on behalf of certain related clients in Harita's shares.
In an order dated March 27, Sebi barred SVS Securities "from accessing the securities market and also prohibit it from buying, selling and otherwise dealing in securities market, directly or indirectly, in any manner whatsoever, for a period of one year from the date of this order."
The market watchdog, on the basis of the alerts generated at BSE and NSE, had conducted a probe into the trading in the scrips of Harita Seating Systems during the period from November 3, 2009 to March 31, 2010.
The investigation revealed that Aquarian had executed all the trades in the scrip of the company on behalf of SVS Securities' clients on the stock exchanges.
The transactions in form of cross deals and synchronised deals had resulted in creation of artificial volume in Harita's shares and also increased the price of the scrip.
Sebi said the shares of the company were illiquid.
"When Aquarian was placing repeated synchronised and cross transactions in an illiquid scrip for the connected/related clients through the noticee (SVS Securities), the noticee, being a professional stock broker, should have suspected that the price and volume in the scrip was being manipulated," Sebi said in the order.
"It cannot be accepted that the noticee did not become suspicious when its sub-broker was placing those orders," it added.
The market regulator has said that the charge against SVS Securities is with regard to failure to discharge due skill, care and diligence in its stock broking business and it has not been found to be actively involved in the alleged price and volume manipulation.