sebi:EAD/PM-AA/AO/3/2017-18

SEBI · SEBI · 2017-05-18 · Prasanta Mahapatra, Adjudicating Officer

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Show Cause Notice disposed of without imposition of any penalty

Provisions invoked

• s. 15H
• s. 15I

Regulations

• Reg. 7
• Reg. 3
• Reg. 3(a)
• Reg. 4(2)(a)

Parties

• Adroit Financial Services Pvt. Ltd.

Holding

The Adjudicating Officer held that violation of Clause A(2) of the Code of Conduct read with Regulation 7 of the Broker Regulations, 1992 by acting as broker and counterparty broker for self-trades of client AKG was not established against Adroit Financial Services Pvt. Ltd. The Show Cause Notice dated July 27, 2017 was disposed of without imposition of any penalty under Section 15HB of the SEBI Act.

Full text

Adjudication Order in respect of Adroit Financial Services Pvt. Ltd. in the matter of Prakash Constrowell Limited Page 2 of 7

Adjudication Order in respect of Adroit Financial Services Pvt. Ltd. in the matter of Prakash Constrowell Limited Page 3 of 7 documents relied upon in the SCN were provided to the Noticee along with the SCN.

Adjudication Order in respect of Adroit Financial Services Pvt. Ltd. in the matter of Prakash Constrowell Limited Page 4 of 7  SEBI’s policy dated May 16, 2017 has settled the position once and for all that self-trades per se does not create market volume and manipulate the price of the scrip, but those self-trades which creates market volume and manipulate the price of the scrip will be treated as fraudulent.  AKG carried out 81,433 trades for 33,85,571 shares of PCL during the investigation period of which self-trade happened for a meagre quantity of 1,84,408 shares through 889 trades. As per the SCN itself trades of the noticee was 10.33% of the total market volume and out of which only 0.56% of total market volume of trades has resulted into self-trades.  The trading pattern followed by AKG was not different from its day to day trading pattern followed by it in any other scrip where it had traded. Thus, the noticee had no reason as a stock broker to suspect the trading activity being carried out by them  If the volume of NSE is also taken into account then the percentage of self-trades quantity of AKG to market volume will be a meagre 0.24%. Since the volume transacted in self-trades is a factor to analyze the manipulative intention of a person as per the SEBI policy dated May 16, 2017 and the same being 0.24% in the instant case, it cannot be said that there was any manipulative intent of AKG to engage in intentional self-trades.  The day wise analysis of the self-t

Source: SecMarx — sebi:EAD/PM-AA/AO/3/2017-18. 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.