sebi:BM/AO-124/2010
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Facts / Headnote
Penalty imposed on the Noticee for violating regulations 4(1), 4(2)(a) and (g) of PFUTP Regulations, 2003
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4(1)
- Reg. 4(2)
Parties
- Rajnish B Jain
Holding
The Noticee, Rajnish B Jain, was found to have violated regulations 4(1), 4(2)(a) and (g) of the PFUTP Regulations, 2003 by indulging in circular/reversal synchronized trades in concert with other connected clients in the scrips of Allcargo and Unity, and a penalty of Rs. 5,00,000 was imposed under section 15HA of the SEBI Act.
Full text
Page 2 of 32 2. The role of the brokers and their clients who traded in the scrip of Allcargo and Unity on BSE and NSE was scrutinized. It was observed during investigation that certain entities had allegedly indulged in circular/reversal synchronized trading in such a manner that led to creation of artificial volume in the scrips.
Page 3 of 32 6. The Noticee replied to the SCN vide letter dated August 9, 2010, stating, inter alia, the following: Please not that I have not done any trade in Allcargo Global Logistics Ltd. and Unity Infraprojects Ltd. at any time in the trading account with M/s Bakliwal Financial Services Pvt. Ltd. or anywhere. Please note that I had just opened trading account with M/s Bakliwal Financial Services Pvt. Ltd. on request of Mr. Ajay Rungta (Branch Manager). All the trades in the said account has been done without my instruction/authority and I am not even aware of the same at all. I have never paid any cheque to M/s Bakliwal Financial Services Pvt. Ltd. and also I have never received any cheque from M/s Bakliwal Financial Services Pvt. Ltd. My question is without receiving any cheque how come M/s Bakliwal Financial Services Pvt. Ltd. gave such a huge limit in my trading a/c.
Page 4 of 32 ii. On analysis of trade log and order log it was alleged that circular/reversal of trades took place between the group in both the scrips. Allcargo iii. At BSE the Group had bought 1,07,511 shares of Allcargo through 580 trades and sold 1,06,799 shares through 605 trades. At NSE the Group had bought 1,07,712 shares of Allcargo through 1614 trades and sold 1,07,521 shares through 1657 trades. Most of the trades were in the nature of intra-day trading with their positions squared off during the day and there was no change in beneficial ownership. iv. In most of the days a clear pattern of circular/reversal trading emerges in the trades among these clients viz. A>B>C>D>E>A, A>B>C>A, A>B>A, A>B>C>B>A, etc. v. This group significantly contributed to volume by entering circular/ reversal of trades at NSE and at BSE and altogether they created volume of 1,68,782 shares which is 48.25% of total 3,49,811 shares traded across the market (both NSE and BSE). Unity vi. The Group had bought 2,02,942 shares of Unity at BSE through 673 trades and 450 buy orders and sold 2,03,192 shares through 673 trades and 419 sell orders which was 29.91% of the market volume of 6,78,853 shares at BSE. The Group had bought 2,06,271 shares of Unity at NSE through 2230 trades and 430 buy orders and sold 2,06,471 shares through 2172 trades and 404 sell orders which was 31.09% of the market volume of 6,63,739 shares at NSE. Most of the trades were in the nature of intra-day trading with their pos
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Source: SecMarx — sebi:BM/AO-124/2010. 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.