sebi:EAD/BJD/BKM/4095-4098/2019-20

SEBI · SEBI · 2003-08-27 · B J Dilip, Adjudicating Officer

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Facts / Headnote

Adjudication proceedings initiated against Noticees for alleged violations of SEBI Act, 1992 and PFUTP Regulations, 2003; findings recorded that Noticees facilitated fraudulent trade practices in scrip of VSL

Provisions invoked

• s. 15
• s. 19
• s. 12A
• s. 12
• s. 15H
• s. 15J
• s. 28A
• s. 239
• s. 409

Regulations

• Reg. 7
• Reg. 3
• Reg. 4(1)
• Reg. 200
• Reg. 3(a)

Parties

• SIC (broker, Noticee 1)
• Col. Rajinder Handa (Noticee 2)
• Noticee 3
• Noticee 4

Holding

The Adjudicating Officer found that Noticee 1 (SIC) and its directors facilitated fraudulent and unfair trade practices in the scrip of Vertex Spinning Limited (VSL) by allowing synchronized trades, cross deals, and concentration of over 73% of trading volume among connected clients, and that Col. Rajinder Handa actively participated as a party to such trades. The Noticees' defenses, including reliance on discharge orders in criminal proceedings and denial of any relationship with VSL entities, were rejected.

Full text

Page 2 of 44 Marg, Police station, Mumbai–400001 stating that the Additional Chief Metropolitan Magistrate, Mumbai(ACMM) had referred the matter for investigation on the basis of complaint filed by S.S. Forging and Engineering Limited(SSFL) that the broker Noticee 1 had falsely transferred Rs. 24 lacs from the client account of SSFL to one Mr. Chetan Wadhwa without authority from SSFL. During the course of investigation the Police suspected the price rigging in the scrip of VSL. It was observed that there was third party transfer of Rs. 24 Lacs by SIC from the client account of SSFL to a third party. It was also observed that there was creation of false appearance of the trading in the scrip of VSL by SIC by facilitating its clients to indulge in synchronized trades, Cross dealings and inflating the price and volume of VSL by fraudulent trade practices. It was, therefore, alleged that the Noticees viz. SIC and its directors, Noticee 2-4, have repeatedly violated Section 12(A)(a), (b), (c) of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as SEBI Act, 1992), Regulations 3(a), (b), (c), (d), Regulation 4(1),4(2)(a), (e), (f), (k), (p) of SEBI (Prohibition of fraudulent and Unfair Trade Practices relating to the Securities Market) Regulation, 2003 (hereinafter referred to as 'PFUTP Regulation 2003) read with Regulation 7 read with Clause A(1) to (5) of Code of Conduct specified under Schedule II of SEBI (Stock Broker and Sub-broker) Regulations, 1992 (

Page 3 of 44 3. Pursuant to investigation, SEBI initiated Adjudication Proceedings against the Noticees and appointed Ms. Anita Kenkare as the Adjudicating Officer vide Order dated June 18, 2014 under Section 19 read with Sub-section (1) of Section 15-I of the SEBI Act and Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as “Adjudicating Rules”) to inquire into and adjudge under Section 15HA of the SEBI Act for the violation of provisions alleged against them. Pursuant to the

Page 4 of 44 and opened personal account for trading, vide A/c No 5V2. - Accounts were also opened in the name of : a. M/s Mansukh Finance & Investment Pvt Ltd A/c No M123, b. Twinstar Finvest Pvt Ltd, A/c No T123, c. M/s S.S.Forging & Engineering Ltd A/c No S201, d. M/s Highlights Leafins Pvt Ltd A/c No H123. - Similarly various individual accounts were opened with the assistance of Mr. Suresh Sharma, Mr. Hemanth Kokatry and Laxman Khamkar, said to be a Senior Manager shares Department of S.S Forging Pvt Ltd. These accounts are as under: a. Sandeep Baldevprasad Mishra A/c No. S117 b. Kuldeep Singh A/c No. K023 c. Ramkumar Sidhar A/c No. S022 d. Narendra Babulal Upadhyay A/c No. N047 e. Daljeeth Singh Matharu A/c No. D008 - All these above mentioned accounts have been opened through and assistance of Mr. Suresh Sharma. Also these accounts have been witnessed by Mr. Hemanth Kokatry and Laxman Khamkar, handed over by Mr. Laxman Khamkar to SIC personally at their office in Mumbai. - However subsequently SIC received letters from M/s Mansukh Finance and Investment Pvt Ltd (hereinafter referred to as the “MFI”), Mr. Suresh Sharma, Director a/c No M123 and Mr. Suresh Sharma a/c No 5V2 dated 31.03.2006 (copy enclosed), informing SIC not to take any instructions from Mr. Kushal Jain and Mr. K. K.

Source: SecMarx — sebi:EAD/BJD/BKM/4095-4098/2019-20. 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.