sebi:BM/AO-138/2011
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Facts / Headnote
Penalty imposed on the Noticee for violations of PFUTP Regulations, 2003 and SEBI (Stock Brokers & Sub-Brokers) Regulations, 1992; allegations under Regulation 4(2)(e) (price manipulation via new high price) and LTP-based price influence not established.
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 15
- Reg. 200
- Reg. 15(1)
- Reg. 4(2)(e)
Parties
- Saroj & Co. (sub-broker affiliated to UPSE Securities Ltd., proprietor Mr. Sanjay Agrawal)
Holding
The Noticee was held liable for creating artificial volumes through circular/reversal trades in the scrip of RCFL, violating PFUTP Regulations 2003 and the sub-broker code of conduct, and a consolidated penalty of Rs. 5,00,000 was imposed (Rs. 3,50,000 under Section 15HA and Rs. 1,50,000 under Section 15HB). However, the allegations of price manipulation through new high price (Regulation 4(2)(e)) and through placing orders above LTP were not established.
Full text
Page 2 of 35 2. During the investigation period the scrip was trade for 138 days. It was observed that the price of the scrip opened at ` 8.90 on March 27, 2009 and moved to a high of ` 80.15 on August 12, 2009 and closed at ` 73.70 on August 12, 2009 with an average volume of 5,258 shares per day. There were no trades executed in the scrip of RCFL at DSE and UPSE during the investigation period.
Page 3 of 35 cause as to why an inquiry should not be held against the Noticee and penalty be not imposed under section 15HA and 15 HB of SEBI Act for the alleged violation specified in the said SCN. The SCN was duly acknowledged by the Noticee.
Page 4 of 35 Submissions in respect of allegation of LTP II. We submit that you have not taken into consideration the fact that the total of more than 500 instances of trades (statement enclosed ) executed in all contributed a cumulative increase of Rs 15.2, over a time span of Four months in price of RCFL and not 43 instances as mentioned by you . It is not possible for anybody to keep track of all purchases and sales of each scrip of all clients. Inability to keep track of Mr Ashesh Agarwal contribution to price rise in particular scrip does not prove any malpractice on our part as it is market of demand and supply and shares fluctuate by more than 50 % in a single day, without any apparent reason. Moreover it is neither practical nor humanly possible for a sub -broker like us to keep track about each and every clients contribution to price rise/fall in a particular scrip on a daily basis until and unless there is a reasonable ground or circumstance warranting a vigil on any clients trades and in the referred case their never appeared any such doubt as the trades were of routine in nature, size, frequency and manner and were timely settled as were being done by our other clients (statement enclosed as annex - II ).
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Source: SecMarx — sebi:BM/AO-138/2011. 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.