sebi:IVD/KSERA-KB/AO/DRK/ASG/EAD/266/32-2011
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Facts / Headnote
Penalty imposed on the noticee for violations of PFUTP Regulations
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4(1)
- Reg. 31
Parties
- Shri Kapil Bhuptani
Holding
The Adjudicating Officer held that the noticee, Shri Kapil Bhuptani, was part of a group that executed synchronized/circular trades and non-genuine transactions in the scrip of KSERA, in violation of Regulations 4(1) and 4(2)(a), (b) and (g) of the PFUTP Regulations, and imposed a penalty of ₹75,000 under Section 15HA of the SEBI Act.
Full text
Page 2 of 13 3. SEBI conducted an investigation into the trading of the scrip of KSERA, during the period from June 01, 2004 to October 31, 2004 (hereinafter referred to as ‘Investigation Period’). During this period, the shares of KSERA were listed only on BSE. The Investigation Report observed that during the Investigation Period the price of the scrip opened at ` 83.00, reached period low of ` 79.90 on June 01, 2004, touched a high of ` 164.00 on October 28, 2004 and closed at ` 151.75 on October 29,
Page 3 of 13 Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the ‘SEBI Act’), read with Rule 3 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as ‘Adjudication Rules’) to inquire into and adjudge under Section 15HA of the SEBI Act, the violations of Regulations 4(1) and 4(2) (a), (b) (e) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the ‘PFUTP Regulations’) alleged to have been committed by the noticee. An Adjudication Order dated August 31, 2009 was passed against the noticee. Subsequently the noticee filed an appeal against the said Order before the Hon’ble Securities Appellate Tribunal (hereinafter referred to as ‘SAT’). The Hon’ble SAT vide its order dated March 23, 2010 remanded the case back to the Adjudicating Officer for a fresh decision.
Page 4 of 13 8. A reply to the SCN dated February 25, 2011 was received from the noticee which inter alia stated the following: i. The noticee denied all the allegations leveled against it in the SCN. ii. The noticee was a retail investor and he had traded in other scrips than KSERA during the investigation period. iii. The noticee’s volume was not significant and the alleged synchronized volume was also not significant. iv. The noticee had no relationship with the parties of the alleged group and no pre-understanding existed with anyone. v. The noticee was not aware of who the counter parties were to his orders keyed-in at the relevant time. vi. Had there been any intention on the part of the noticee to do synchronized deals with premeditated plan to create artificial volume, then his volume of sell as well as buy in the scrip of KSERA would have been substantial, continuous at every price and on many days. No loan transaction (of money and /or KSERA shares) with any party of the group has been alleged. vii. On what basis the noticee has been bunched, bundled, tied, included and lumped with the other members of the group is not stated. viii. There is no basis to suggest that the noticee acted in collusion with someone.
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Source: SecMarx — sebi:IVD/KSERA-KB/AO/DRK/ASG/EAD/266/32-2011. 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.