sebi:EAD/NP/JS/AO/21/2017
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Facts / Headnote
Show-cause notice dismissed; no inquiry initiated and no penalty imposed on either Noticee
Provisions invoked
- s. 15
- s. 15H
Regulations
- Reg. 7
- Reg. 2(c)
- Reg. 3
- Reg. 4
- Reg. 4(1)
- Reg. 4(2)
- Reg. 200
- Reg. 3(a)
- Reg. 9
Parties
- Ajay Desai
- Indira Securities Private Limited
Holding
The Adjudicating Officer declined to initiate inquiry or impose penalty against Noticee 1 (Ajay Desai) for alleged creation of artificial volume through self-trades in MIC scrip, and against Noticee 2 (Indira Securities Private Limited) for alleged Code of Conduct violation, finding the self-trades were normal trades arising from technicalities of anonymous online trading rather than manipulative intent.
Full text
P a g e 2 | 22 2. As per finding of Investigation Report (IR), Shri Ajay Desai (hereinafter referred to as Noticee 1) entered into self-trades repeatedly through Indira Securities Private Limited (hereinafter referred to as Noticee 2) being Registered Stock Broker bearing SEBI Regn. No. INB 011286631 & INB 231286635, which created artificial volume in the scrip of MIC, leading to false and misleading appearance of trading in the securities market. The SCN alleged that the Noticee 1 created artificial volume in the scrip in violations of Regulations 3(a), (b), (c) & (d), 4(1), 4(2)(a) & (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (hereinafter referred to as PFUTP Regulations) and Noticee No 2 alleged to have acted as a stock broker and counter-party stock broker in respect of self-trades of Noticee 1 in the scrip of MIC, thereby it failed to adhere to Clause A (2) of the Code of Conduct for Stock Brokers as prescribed under Schedule II read with Regulation 7 of SEBI (Stock Broker and Sub broker) Regulations, 1992. Based on the findings of the investigation, SEBI initiated Adjudication Proceedings against the Noticee 1 under Section 15 HA of SEBI Act, 1992 for the alleged violation of the provisions of PFUTP Regulations as enumerated above and against Noticee 2 under Section 15 HB of SEBI Act, 1992 for the alleged violation as enumerated above.
P a g e 3 | 22 11, 2016 was issued to the Noticee 1 and Noticee 2 respectively under rule 4 of the AO Rules to show-cause as to why an inquiry should not be initiated against Noticees and penalty be imposed upon it under section 15 HA & 15 HB of SEBI Act for the alleged violation specified in the said SCN. The Noticees were given 15 days of time to make their submission against the allegations made in SCNs.
P a g e 4 | 22 June 24, 2016 requested for 4 weeks of time to file his reply. Accordingly, another date of personal hearing was fixed in consultation with Juris Matrix and the hearing was scheduled on July 26, 2016. On the scheduled date of hearing on July 26, 2016, Mr Ajay Desai and Mr Anil Narendra Shah, Advocate, Juris Matrix appeared before me for personal hearing and made oral submissions. They relied upon in their reply dated July 11, 2016 to SCN.
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Source: SecMarx — sebi:EAD/NP/JS/AO/21/2017. 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.