sebi:15382

SEBI · SEBI · Madhukar, Whole Time Member

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Facts / Headnote

DAPL restrained from accessing the securities market and prohibited from buying, selling or dealing in securities for a period of six months

Provisions invoked

• s. 11B
• s. 11
• s. 19

Regulations

• Reg. 4
• Reg. 11

Parties

• Dinils Adhesives Pvt. Ltd. (DAPL)

Holding

SEBI found DAPL guilty of indulging in irregular market practices in violation of regulation 4(a) to 4(d) of the FUTP Regulations, 1995, by engaging in synchronized (structured) trades with ISL in the scrip of APIL. SEBI restrained DAPL from accessing the securities market and from buying, selling or dealing in securities for six months.

Full text

1.0 Investigation 1.1 Investigation conducted by the Securities and Exchange Board of India (hereinafter referred to as "SEBI") into the trading of the scrip of Astraseneca Pharma India Ltd. (formally known as Astra IDI Ltd. and hereinafter referred to as "APIL") revealed that Dinils Adhesives Pvt. Ltd. (hereinafter referred to as "DAPL") had traded to the tune of 8,950 shares through Fincap Portfolio Ltd. (hereinafter referred to as "FPL"). The orders placed by DAPL substantially matched with that of Ivory Securities Ltd. (hereinafter referred to as "ISL"), in terms of time, price and quantity. ISL had traded through N J Shares & Securities Pvt. Ltd. 1.2 ISL had dealt through a Trading Member of National Stock Exchange (hereinafter referred to as "NSE"), N J Shares & Securities P Ltd. (hereinafter referred to as "NJSSPL") on two days i.e. 6th August, 2001 and 7th August, 2001. The total quantity dealt by ISL was 8,950 shares. The counter party broker to the transactions made by NJSSPL for ISL was FPL which traded for its client DAPL. 1.3 Investigation further revealed that one of the directors of DAPL, Nitish Moondhra had same address as that of sub-broker of FPL, Sonal Moondhra of Indsec Securities, which is 11, Hingorani House, Dr A B Road, Worli, Mumbai 400018 and FPL was situated at 12, Hingorani House, Dr. A B Road, Worli, Mumbai 400018. 1.4 It was alleged that the trading done by DAPL was irregular market practice in violation of regulation 4 (a) to (d) of Securities a

2.0 Show cause notice and reply 2.1 DAPL was issued a show cause notice (hereinafter referred to as "SCN") dated 30th April, 2004 intimating the findings of investigation and to show cause as to why directions under section 11B read with section 11 of the SEBI Act, 1992 read with regulations 11 and 13 of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as "FUTP Regulations, 2003") should not be issued for violating regulation 4 (a) to (d) of FUTP Regulations, 1995. Along with the SCN, four annexures containing the details of trading, trade log/ order log, details of price volume etc. done by DAPL were also forwarded. DAPL was also asked to indicate in its reply whether it would prefer personal hearing before Whole Time Member, SEBI. Since no reply was received from DAPL, a reminder letter dated 11th June, 2004 was issued to DAPL advising it to send reply latest by 20th June, 2004. 2.2 DAPL vide letter dated 14th June, 2004 replied to the show cause notice dated 30th April, 2004 submitting that it does not wish to make any additional

3.2 I observe, from the trade log and order log of APIL at NSE, that orders were put simultaneously both by FPL for DAPL and NJSSPL for ISL for same quantity, at same price and more or less at the same time. The time of punching in the buy and sell orders matched second by second on many occasions. Price Volume details revealed that on two days on which DAPL and ISL traded i.e., 6th August, 2001 and 7th August, 2001, volume of the scrip of APIL was highest in the market. The gap between orders placed by DAPL and ISL was too narrow. Further the whole order quantity had matched. Both parties to the transactions had entered buy and sell orders of shares almost simultaneously, purchase and sale quantity was exactly the same. 3.3 I observe from order log of NSE that on 6th August, 2001 first buy order for 1, 500 shares was put by FPL on behalf of DAPL at 12:13:45 at a price of Rs.268.50 and simultaneously at the same time and price a sale order of 1,500 shares was put in by NJSSPL on behalf of ISL, both the orders matched immediately. The next

Source: SecMarx — sebi:15382. 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.