sebi:IVD/WOL/AO/DRK/ASG/EAD3-80/2009
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Facts / Headnote
Noticee found in violation; consolidated penalty of Rs. 3,50,000 imposed
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 7
- Reg. 3
- Reg. 4(1)
- Reg. 31
Parties
- Arihant Stocks and Shares (Sub-broker of Padmakant Devidas Securities Limited)
Holding
The noticee Arihant Stocks and Shares was held to have violated Regulation 4(1) and 4(2)(a) and (e) of the PFUTP Regulations, 2003 and Clauses A(1), A(2) and D(1), (4), (5) of the Code of Conduct by executing synchronized/structured sell trades for 95,050 shares in the post-stock-split period to manipulate the price of Wellworth Overseas Ltd. A consolidated penalty of Rs. 3,50,000 (Rs. 3,00,000 under Section 15HA and Rs. 50,000 under Section 15HB) was imposed, while pre-stock-split allegations were not sustained.
Full text
Page 2 of 15 selling clients in the scrip were connected /related to each other and with WOL and with a certain group of entities called the Parklight Group. WOL appears to be a Parklight group company. The volumes in the scrip were created artificially amongst these entities and they contributed to almost 80 per cent of the total market volumes during the entire period of investigation. Self trades, circular trading synchronized/ structured trades and reversal of trades amongst various other members were also observed with almost negligible deliverable position thus contributing to the volumes in the scrip. Based on the above facts, SEBI conducted an investigation relating to buying, selling or dealing in the shares of WOL for the period from January 01, 2003 to October 23, 2003 (hereinafter referred to as the ‘Investigation Period’).
Page 3 of 15 6. The IR observed that in the pre- stock split period during the patch from March 13, 2003 to May 09, 2003 the scrip was traded for 21 days for 3200 shares with average volume of 50 to 400 shares. The price of the scrip rose from Rs. 0.15 on March 13, 2003 to Rs. 4.75 on May 09, 2003. During these 21 days some clients related/connected to each other traded in the scrip. These entities were identified in the IR as: a. Mukesh Choksi (trading through the Harikishan HIralal) b. Nimesh Gandhi (trading through stock broker Galaxy Broking Limited.) c. Deep Stock Broking Pvt. Ltd. (trading through its stock broker Jitendra Harjivandas Securities Pvt. Ltd.), and d. Arihant Stocks & Shares (hereinafter referred to as ‘the noticee’, trading through stock broker Padmakant Devidas Securities Ltd.) (This group is hereinafter referred to as ‘Group I’). The IR stated that all the buy orders and sell orders among the above entities were synchronized/ structured as the difference between the respective buy
Page 4 of 15 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 and Section 15HB of the SEBI Act, the violations of Regulation 4(1) & 4(2) (a) and (e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 as well as violation of Clauses A(1), A(2) and D(1), (4) (5) of the Code of Conduct prescribed for Stock brokers in Schedule II under Regulation 7 of SEBI(Stock Brokers and Sub-Brokers) Regulations, 1992 alleged to have been committed by the noticee.
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Source: SecMarx — sebi:IVD/WOL/AO/DRK/ASG/EAD3-80/2009. 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.