sebi:AO/BJD/MAS/EAD/76/2017
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Facts / Headnote
Adjudication proceedings disposed of without imposition of any penalty
Provisions invoked
- s. 15
- s. 15H
Regulations
- Reg. 7
- Reg. 4
- Reg. 3
- Reg. 3(a)
Parties
- Smart Equity Brokers Private Limited
Holding
The allegations against the Noticee as client that self trades created artificial volumes and violated Regulation 3(a)-(d) and 4(1), 4(2)(g) of the PFUTP Regulations were not established. The Noticee as broker was found not to have exercised adequate due diligence under Clause A(2) of the Code of Conduct, but the Adjudicating Officer took a lenient view and declined to impose any penalty.
Full text
Page 2 of 16 2. During the course of investigation, It was observed that Smart Equity Brokers Private Limited (hereinafter referred to as the Noticee), had indulged in irregular trading activities in the scrip of BIL to create artificial volume by way of 'Self- trades’. Self trades are fictitious trades wherein the same client appears as both buyer and seller and therefore do not result in change of beneficial ownership and creates false and misleading appearance of trading in the market. It was therefore alleged that the Noticee by virtue of repeatedly entering into self trades, created artificial volume in the scrip and thus violated Regulation 3 (a), (b),(c),(d) and 4 (1), 4(2) (g) of SEBI PFUTP Regulations, 2003. Further, the Noticee being a SEBI registered intermediary, executed the above trades, by acting as broker on both buy and sell side for executing 'Self-trades' in its own trading account in violation of the provisions of Clause A (3), (4) & (5) of Code of Conduct for stock brokers as specified under Schedule II read with Regulation 7 of SEBI (Stock Brokers and Sub- Brokers) Regulations, 1992, which is liable for a penalty under Section 15HB of SEBI Act, 1992.
Page 3 of 16 SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING 5. A Show Cause Notice (SCN) bearing no.-EAD-5/ADJSVKM/HKS/OW/31023/3/2016 was issued to the Noticee by the erstwhile AO on November 15, 2016. A brief
Page 4 of 16 REPLY TO THE SCN 7. The Noticee made its preliminary written submissions to the SCN, vide letter dated December 08, 2016 wherein the Noticee requested for inspection of documents. Subsequently, inspection of documents was provided to the Noticee, on whose behalf Mr. Prakash Shantilal Shah and Mr. Robin Mahesh Shah, the authorised representatives appeared for inspection. The Noticee was also provided an opportunity of hearing on November 09, 2017 wherein its authorised representative Mr. Meit Shah of M/s Prakash Shah & Associates appeared for hearing. The noticee reiterated the
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Source: SecMarx — sebi:AO/BJD/MAS/EAD/76/2017. 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.