sebi:EAD-2/AO/09/2012
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Violations established; penalty imposed
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4(1)
- Reg. 4(a)
- Reg. 2
- Reg. 4(2)(a)
- Reg. 4(2)(g)
- Reg. 4(2)(b)
- Reg. 4(2)(n)
Parties
- M/s Polar Securities and Finance Private Ltd.
Holding
The Noticee was found to have violated Regulations 4(1), 4(2)(a), (b), (g) and (n) of the PFUTP Regulations, 2003 by executing synchronized, circular and reversal trades in the scrip of CFL, and a penalty of Rs.5,00,000 was imposed under Section 15HA of the SEBI Act.
Full text
Page 2 of 25 2. The investigation revealed that certain entities had allegedly indulged in circular deals / reversal trading in such a manner that led to creation of artificial volume and impacted the price of the scrip.
Page 3 of 25 Show Cause Notice, Reply & Personal Hearing 5. The AO issued a Notice bearing no. EAD/AP/ADJ/68062/2006 dated May 30, 2006 (hereinafter referred to as ‘SCN’) to the Noticee in terms of the provisions of Rule 4 of the Adjudication Rules requiring it to show cause as to why an inquiry should not be held against it for the alleged violations. It was alleged in the SCN that the gross traded quantity of the Noticee in the scrip of CFL during the investigation period constituted 25.05% (NSE) and 24.88% (BSE) of the market gross quantity. The Noticee traded through its broker M/s Keynote Capitals Ltd. (Keynote) in significant quantity during the investigation period. The Noticee executed synchronized, circular and reversal trades with its counter parties ISE Securities and Services Ltd., Member NSE dealing for Dove Securities Pvt. Ltd., a sub-broker who in turn was trading on behalf of its clients viz. Gopal Kumar Agarwal, Bhagwandas Agarwal, Shankar Agarwal and K Venkataraman and M.J Patel and Stock Brokers Ltd. (M.J Patel), Member BSE dealing on behalf of its client Tarun Aggarwal.
Page 4 of 25 7. The Noticee in its replies inter-alia submitted that it is an investment company engaged in making investment in securities market in the ordinary course of business. It became the client of Keynote in the year 2003. It denied of having entered into any reversal of trades or circular deals as alleged. It traded in the ordinary course of business based on its commercial wisdom through SEBI Registered Broker in a transparent manner. It commenced trading in the scrip when the price was already on higher side and even after it stopped trading; the price of the scrip had increased steadily and touched a high of Rs.194.80 on December 24, 2003. Out of the total period, it traded only on 18 days on NSE and 17 days on BSE. On certain days of its trading, the price of the scrip had fallen. It had no link / connection with either its broker or counter party brokers or the counter party clients. There were many other investors who traded in the scrip. It is not that its trade had constituted 100% volume. Simply because it had done square off trades, no sinister motive can be attributed to it. The selection of the counter-parties was not in its hand as traded in a screen based trading mechanism.
You have read the preview. Create a free account to read the full order, track this party, and analyse it in Ontology.
Free accounts include 10 searches/day with full order access.
Source: SecMarx — sebi:EAD-2/AO/09/2012. 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.