sebi:AO/SBM/EAD-3/152-153/2018
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Facts / Headnote
Disposed of; allegations against both Noticees dropped, no penalty imposed
Provisions invoked
- s. 15
- s. 15H
Regulations
- Reg. 7
- Reg. 3
- Reg. 3(a)
Parties
- M/s AKG Securities & Consultancy Ltd
- M/s Adroit Financial Services Pvt. Ltd
Holding
The Adjudicating Officer held that the allegations against Noticee 1 (AKG Securities) of violating PFUTP Regulations through self-trades, and against Noticee 2 (Adroit Financial Services) of failing to exercise due skill, care and diligence, were unsustainable, and neither Noticee was liable for any monetary penalty under sections 15HA and 15HB of the SEBI Act.
Full text
Page 2 of 15 FACTS OF THE CASE 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') had conducted an investigation into the trading activities in the scrip of Ess Dee Aluminium Ltd. (hereinafter referred to as ‘EAL’) for the period September 01, 2012 to June 30, 2013 (hereinafter referred to as ‘investigation period’). During the course of investigation, it was observed that M/s AKG Securities & Consultancy Ltd (hereinafter referred to as ‘AKG’ / ‘Noticee 1’) while trading through its stock broker viz. Adroit Financial Services Pvt. Ltd (hereinafter referred to as ‘Adroit’ / ‘Noticee 2’) had executed self-trades in the scrip of EAL on the Bombay Stock Exchange (hereinafter referred to as ‘BSE’) during the above mentioned investigation period. Therefore, it was alleged that Noticee 1 has violated the provisions of regulations 3(a), (b), (c), (d), 4(1), 4(2)(a) and 4 (2)(g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’). It was also alleged that Noticee 2, as a registered stock broker, had failed to exercise due skill, care and diligence while dealing in the scrip of EAL on behalf of its client i.e. Noticee 1 during the aforementioned investigation period and therefore, it was alleged that Noticee 2 has violated the provisions of clause A(2) of the Code of Conduct prescribed for Stock Brokers contained in Schedule II under Regulation 7 of SEB
Page 3 of 15 Ravikumar, the undersigned was appointed as the Adjudicating Officer vide Order dated June 22, 2015 to inquire into and adjudge under the provisions of section 15- I(1) of the SEBI Act read with rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as ‘Adjudication Rules’) under the provisions of sections 15HA and 15HB of the SEBI Act for the alleged violation of the relevant provisions of law by the Noticees, as mentioned above.
Page 4 of 15 appearance of trading in the scrip of EAL. Self-trades are those where there is no change in beneficial ownership. Such trades create artificial volume in the scrip and give a false and misleading appearance of trading in the scrip. The details of self-trades of Noticee 1 executed through Noticee 2 are as follow: Total Self Trade Volume Total Self Trade Count Self- Trade count from the same terminal No. of days on which self- trades done % of Self Traded Quantity to market Volume Net LTP contributi on by self- trades (in Rs.) 11,515 134 100 23 .08 11.2
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Source: SecMarx — sebi:AO/SBM/EAD-3/152-153/2018. 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.