sebi:AP/AO-03/2009-10

SEBI · SEBI · Amit Pradhan, Adjudicating Officer

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Facts / Headnote

Violation found; penalty of Rs. 5,00,000 imposed under Sections 15HA and 15HB of SEBI Act, 1992

Provisions invoked

• s. 15
• s. 15H
• s. 15J
• s. 0C

Regulations

• Reg. 7
• Reg. 4
• Reg. 47

Parties

• Uttam Financial Services Ltd. (now known as Mansukh Stock Brokers Ltd.)

Holding

The Adjudicating Officer held that Uttam Financial Services Ltd. violated Regulation 4(1) and 4(2)(a), (b) and (g) of PFUTP Regulations and Regulation 7 read with Clauses A(1)-(4) of the Stock Brokers Code of Conduct by synchronized trading creating artificial volumes in the scrip of Karuna, and imposed a penalty of Rs. 5,00,000 under Sections 15HA and 15HB. The charge of circular trading was held not crystallized against the noticee.

Full text

Page 2 of 17 brokers Uttam Financial Services Ltd., S.P. Jain Securities Pvt. Ltd., Peninsular Capital Market Ltd., Galaxy Broking Ltd., Adolf Pinto, Sanchay Fincom Ltd., Harikishan Hiralal, P.J. Choudhary, Vijaykumar J. Thakkar, ISJ Securities Pvt. Ltd., Arcadia Brokers Pvt. Ltd. (Sub-Broker). These persons traded significantly in the scrip, the group aggregately purchased 35,34,831 shares and sold 35,34,681 shares which constituted almost 84.5 % of the gross volumes on the exchange during the period under investigation. The trading among these had contributed about 78.45 % of the total market volume as can be seen in the table mentioned below: Table-A Member Name Client Name Total Buy Quantity Buy among these clients Buy among group of clients % of market volume Total Sell Quantity Sell among these clients Sell among group of clients % of market volume Adolf Pinto Kenneth Pinto 39150 38850 0.93 39150 39150 0.93 Dipank Shah 62050 61578 1.47 62450 60850 1.47 Sunil Purohit 428567 421650 10.08 427567 413004 10.08 Bhagwandas & Co

Page 3 of 17 planned carefully in order to avoid any detection. The trades executed during this period by group of brokers appeared to be fictitious.

Page 4 of 17 3.0 Show Cause Notice/ Reply 3.1 A Show Cause Notice (hereinafter referred to as ‘SCN’) dated January 19, 2007 under Rule 4(1) of the said Rules was issued to noticee communicating the detailed charges leveled against it. Noticee replied to this SCN vide its letter dated February 22, 2007, thereby denying the charges. 3.2 The reply of noticee was considered in light of the allegations leveled against it. Upon consideration undersigned decided that an inquiry should be held in the matter and a notice of inquiry dated March 28, 2007 was therefore issued to noticee under Rule 4(3) of Adjudication Rules, fixing the date of personal hearing on April 16, 2007. On the date fixed noticee appeared through its representative before the undersigned for inquiry and reiterated the submissions made vide letter dated February 22, 2007. 4.0 Consideration of Issues and Findings 4.1 I have carefully considered the facts of the case and the reply of the noticee including the submissions made during the personal hearing. The following issues arise for consideration in the present case: a) Whether noticee has violated Regulations 4 (1), 4 (2) (a), (b), (e), (g) and (n) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and b) Whether noticee has violated Regulations 7 read with Clause A (1), (2), (3), (4) and (5) of the Code of Conduct specified under Schedule II of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992.

Source: SecMarx — sebi:AP/AO-03/2009-10. 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.