sebi:10492

SEBI · SEBI · 2004-06-25 · Madhukar, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Warning/direction to be careful in dealings and not to indulge in similar trading in future; no debarment or monetary penalty imposed

Provisions invoked

• s. 11B
• s. 11
• s. 19

Regulations

• Reg. 4
• Reg. 11

Parties

• M/s. Kuber Finstock Pvt. Ltd.

Holding

M/s. Kuber Finstock Pvt. Ltd. was directed to be careful in its dealings in the securities market and not to indulge in similar trading as in BTL in future, with any future violation of the SEBI Act or rules/regulations to be viewed seriously.

Full text

whereas, in the said investigations M/s. Kuber Finstock Pvt. Ltd. (hereinafter referred to as ‘Kuber’) having its corporate office at 103, ‘B’ Wing, Bhaveshwar Plaza, L.B.S. Marg, Ghatkopar (W), Mumbai-86, were found to have traded in large quantities in the illiquid scrip of BTL through M/s Joindre Capital Services Ltd. & M/s Promod Kumar Jain Securities Pvt. Ltd., members BSE in settlement nos. 38 to 41, and whereas, it was found that as against the total volume of 94,92,100 shares of BTL traded during the settlement no.38 to 41, the traded volume of Kuber was substantially high to the tune of 15,63,800 shares, and whereas, it was further found that out of 15,63,800 shares traded during the investigation period, 9,26,700 shares were traded by Kuber only in one settlement no. 41 and, whereas it was noted that during this settlement no. 41, Kuber traded through both the aforesaid brokers, and whereas it was also found that in all these trades the buy and sell order were placed in such a way that they matched without intention to transfer their beneficial ownership and operated only as a device to create a false and misleading appearance of trading on the securities, in violation of Regulation 4 (a),(b) (c) and (d) of SEBI (Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 ( hereinafter referred to as ‘said regulations’), and whereas, SEBI issued a show cause notice dated 25.6.2004 to Kuber asking why appropriate direction under Regulation

whereas Kuber replied vide letter dated 16.8.2004 denying any kind of manipulative activities on their part, and, whereas, an opportunity of personal hearing was given to Kuber on 10.3.2005 in observance of principles of natural Justice wherein oral submissions were made by their lawyer. These oral submissions were followed by written submissions dated 16.03.05 and in both the submissions it was interalia submitted on behalf of Kuber that these were normal market transactions done to earn profit no undue gain or unfair advantage accrued to them as a result of their trading and, whereas, the main issue to be decided is whether the large buy and sell transaction of Kuber in an illiquid scrip of BTL during the period under investigation and specially trading of total 9,26,700 shares in settlement no 41, that too through two different brokers were of manipulative nature and were in violation of Regulation 4 of SEBI (Fraudulent and Unfair Trade Practices) Regulations, 1995. I have gone through the submissions made by Kuber and I note that during the investigation proceedings, in a statement given on behalf of Kuber on 17.12.2003, it was submitted that trades were entered by them for making profits. Although, I note that Kuber has taken the plea that their trades were genuine and were not done with malafide intent , it must be stated that large trades like those done by Kuber have this usual characteristic of trading which affects the normal price discovery mechanism of the market,

Place : Mumbai MADHUKAR WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

Source: SecMarx — sebi:10492. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.