sebi:EAD-2/AO/03/2012
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Facts / Headnote
Violation of PFUTP Regulations found; monetary penalty of Rs. 5,00,000 imposed under Section 15HA of the SEBI Act
Provisions invoked
- s. 15
- s. 15J
- s. 15H
Regulations
- Reg. 3
- Reg. 4(1)
Holding
The Noticee violated Regulations 4(1), 4(2)(a), (b), (g) and (n) of the PFUTP Regulations by acting in concert with a group to manipulate the scrip of PIL, and is liable to monetary penalty under Section 15HA of the SEBI Act.
Full text
Page 2 of 12 and manipulated the market in the scrip of PIL. The Group was the major net purchasers of the scrip during the period of investigation. The Group transferred the shares bought from the market to various beneficiary accounts through off-market transactions who in turn sold the shares in the market. The Noticee and some of the other entities mentioned above allegedly indulged in circular trading with one leg of the transaction in off-market, inputting orders at incrementally higher prices than the previous traded prices and thereby manipulated the market in the scrip of PIL.
Page 3 of 12 Show cause Notice, Reply and Personal Hearing 4. The AO issued a Show Cause Notice dated February 18, 2010 (SCN) under Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 (hereinafter referred to as the ‘Adjudicating Rules’) to the Noticee to show cause as to why an inquiry should not be held against him and penalty be not imposed under Sections 15 HA of the SEBI Act, for the alleged violation of the provisions of Regulations 4(1), 4 (2) (a), (b), (g) & (n) of the PFUTP Regulations.
Page 4 of 12 8. As the Noticee has not put up any defence or challenged the SCN, it can be assumed that the charges levelled in the SCN have been accepted by the Noticee. This is in accordance with the principle laid by Hon’ble Securities Appellate Tribunal in the matter of Classic Credit Ltd. v. SEBI [2007] 76 SCL 51 (SAT - MUM.) wherein it was inter-alia held that “…The appellants did not file any reply to the second show-cause notice. This being so, it has to be presumed that the charges alleged against them in the show-cause notice were admitted by them”. However, in order to pass a speaking order, the undersigned is going to analyse the evidence and allegations made against the Noticee.
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Source: SecMarx — sebi:EAD-2/AO/03/2012. 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.