sebi:BM/AO-63/2011
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Facts / Headnote
Violation established; penalty of Rs. 2,00,000 imposed
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4(1)
- Reg. 4(2)
Parties
- Suresh Hanswal
Holding
The Noticee violated regulations 4(1), 4(2)(a) and (g) of PFUTP by indulging in circular/reversal synchronized trades in Allcargo and Unity in concert with connected clients. A penalty of Rs. 2,00,000 under section 15HA of the SEBI Act was imposed on the Noticee.
Full text
Page 2 of 28 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 28 6. Although the SCN was delivered, the Noticee did not submit any reply to the same. In the interest of natural justice and in order to conduct an inquiry as per rule 4 (3) of the Rules, the Noticee was granted an opportunity of personal hearing on October 25, 2010 at SEBI, Head Office, Mumbai vide notice dated October 7, 2010. The notice of inquiry returned undelivered. Subsequently, the notice of inquiry was published in the Hindustan Times (Delhi Edition) on February 9, 2011 vide which it was informed that the notice of inquiry was issued to the Noticee and the same may be collected by the Noticee from the office of the undersigned by hand or through authorized representative. Further, a copy of the notice of inquiry was also uploaded on SEBI website under the heading “Unserved Summons/Notices” on January 11, 2011. However, despite the publication so made, the Noticee did not appear on the prescribed date. For the reasons mentioned above, I observe that the Noticee was provided with enough opportunity to submit reply / be
Page 4 of 28 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).
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Source: SecMarx — sebi:BM/AO-63/2011. 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.