sebi:BM/AO-8/2010
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Facts / Headnote
Penalty imposed on the Noticee for violation of PFUTP Regulations and Code of Conduct for Stock Brokers
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 7
- Reg. 3
Parties
- Shyam Lal Sultania
Holding
The Noticee, Shyam Lal Sultania, was found to have violated regulations 3, 4(1), 4(2)(a), (b), (e), (g), (n) and (o) of PFUTP Regulations and clauses A(1), (2), (3), (4) and B(4)(a) of the Code of Conduct for Stock Brokers by executing cross deals and synchronized trades that created artificial volume and price movement in the scrip of SCL. A total penalty of Rs.3,00,000/- (Rs.2,00,000 under section 15HA and Rs.1,00,000 under section 15HB of SEBI Act) was imposed on the Noticee.
Full text
Page 2 of 15 Rs.17.6 to Rs.84/- during the period February 9, 2005 to March 31, 2005 2. On analysis of the trading data obtained from CSE it was observed that the transactions of six brokers viz: Mukesh Dokania & Co., Rajendra Prasad Shah, Ahilya Commercial Pvt. Ltd., Bubna Stock Broking Services Ltd., N.M. Lohia & Co. and Shyam Lal Sultania (hereinafter after refereed to as the “Noticee/SLS”), constituted 62% of the volume in the scrip of SCL. The role of the brokers and the entities who had traded in the scrip of SCL was scrutinized. It was alleged that through collusion with the brokers, shares of SCL were transacted in such a manner that led to creation of artificial volumes in the scrip and was designed to create a false market leading to significant price movement in the scrip.
Page 3 of 15 4. Shri V.S. Sundaresan was appointed as Adjudicating Officer vide order dated March 27, 2008 under section 15 I of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) read with rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as ‘Rules’) to inquire into and adjudge the alleged violations of provisions of PFUTP and Brokers Regulations committed by the Noticee.
Page 4 of 15 • We had transacted in the shares of Sangotri Constructions Limited purely based on demand supply equilibrium in the market. We only acted as a broker to arrange transactions between Buyers and Sellers. We had always placed orders in the electronic trading mechanism system of the Stock Exchange purely on the behalf of our clients without any malafide intentions of creation of artificial price and volumes in the scrip of Sangotri. We have never entered into any transactions which were not genuine trade transactions. All the transactions were culminating from placements of orders in the ordinary course of business in the screen based online trading system where the electronic trading mechanism automatically matches with the different players in the market. • It is further submitted that merely because a particular purchase and a particular sale get matched in the online trading system, it should not be
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Source: SecMarx — sebi:BM/AO-8/2010. 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.