sebi:ID3/JDIL/AO/DRK/AKS/EAD3-232/09/135-10
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Facts / Headnote
Violation of Regulations 4(1) and 4(2)(a), (b) and (e) of PFUTP Regulations found; penalty of Rs. 25,00,000 imposed under Section 15HA of the SEBI Act
Provisions invoked
- s. 15
- s. 15H
- s. 15J
- s. 44A
Regulations
- Reg. 3
- Reg. 4(1)
- Reg. 31
Parties
- Sparkline Mercantile Co. Pvt. Ltd.
Holding
The noticee violated Regulations 4(1) and 4(2)(a), (b) and (e) of the PFUTP Regulations by executing synchronized, non-genuine trades in the scrip of JDIL creating artificial volume and price manipulation, and is liable to a penalty of Rs. 25,00,000 under Section 15HA of the SEBI Act.
Full text
Page 2 of 16 JDIL. BSE conducted a snap investigation for the period from May 10, 2005 to September 02, 2005. During this period the price of the scrip rose from the opening price of ` 164.10 on May 10, 2005 to ` 309.50 on September 02, 2005. BSE has also referred the matter for the consideration of SEBI vide its letter dated March 10, 2006.
Page 3 of 16 5. On the basis of the phone numbers/ contact person/ Director/ and past investigation, a group of connected/ common clients consisting of Shri Chirag Tanna, Samradha Finstock Pvt. Ltd., Emerging Capital Advisors Ltd., Hem Kanak Mercantile Co. Pvt. Ltd., V & U Caplease and Sparkline Mercantile Co. Pvt. Ltd., was found to have dealt with each other in the scrip of JDIL through various stock brokers. Sparkline Mercantile Co. Pvt. Ltd., (hereinafter referred to as ‘the noticee’) was a major client dealing through the stock broker Religare Securities Ltd. The stock brokers M R Share Broking Pvt. Ltd., Indiabulls Securities Ltd., Religare Securities Ltd., UTI Securities Ltd., Samurai Securities Pvt. Ltd., mainly dealt for these common/ connected clients. This group accounted for over 25% of the total traded volumes in the scrip. It was observed that these connected entities had entered into trades with each other throughout the period of examination and the majority of their trades appeared to be through synchronized orders. The Investigation Report alleged that the connected entities placed buy and sell orders which had resulted into trades among themselves and were thus instrumental in creating artificial volumes and price rise in the scrip which distorted the market equilibrium. APPOINTMENT OF ADJUDICATING OFFICER
Page 4 of 16 SHOW CAUSE NOTICE, REPLY AND HEARING 7. A Show Cause Notice (hereinafter referred to as ‘SCN’) dated July 25, 2010 was served on the noticee by Registered Post Acknowledgment Due asking it to show cause as to why an inquiry should not be held against it and why penalty, if any, should not be imposed on it under Section 15HA of the SEBI Act in respect of the violations alleged to have been committed by the noticee.
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Source: SecMarx — sebi:ID3/JDIL/AO/DRK/AKS/EAD3-232/09/135-10. 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.