sebi:MO/85/IVD/09/04

SEBI · SEBI · G A K Batra, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Prohibition from buying, selling or dealing in securities for a period of six months with immediate effect

Provisions invoked

• s. 11B

Regulations

• Reg. 11
• Reg. 4
• Reg. 4(a)
• Reg. 199

Parties

• Rahul R. Shah

Holding

SEBI held that Rahul R. Shah violated Regulations 4(a) to (d) by acting in concert with the Dadhias to create false volume and manipulate the Synthiko Foils scrip, and prohibited him from buying, selling or dealing in securities for a period of six months.

Full text

6.                  It was noted that Rahul & Rajesh had dealt through two different brokers of BSE, in the same settlement, but had either bought or sold. Thei volume, as stated above, was around 1,32,900, which was 5.5% of BSE’s gross volume in the scrip during the period under investigation.

15.              However, I am unable to accept the contentions of Bhavesh in this regard, as Rahul had clearly admitted that he had purchased the shares of Sy for Bhavesh only, who, at that point of time, was ready to pay for the same, but subsequently failed to make the payments for the shares bought behalf. In response to the above statements of Bhavesh, Rahul has contented that the said shares were pledged with him to enable him to raise required for paying margin money to the exchange. As a proof of his claim in this regard, I have noted that Rahul has provided the original agreement, power of attorney, letters written by Bhavesh, as well as copies of the cheques given by Bhavesh, which were dishonored by the b presentation by Rahul. Admittedly, Rahul was holding a total of 45,200 shares of Synthiko, bought for Bhavesh, in his possession and had alleged several times to contact Bhavesh to recover the money, who had never gotten in touch with him for the past seven years, but upon receiving notice in this regard, contacted Rahul to resolve the problem mutually and amicably.

24.              In this context it is relevant to note the provisions of Regulation 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Se Market) Regulations, 1995, which read as under :  Regulation 4 : ‘No person shall - (a)  effect, take part in, or enter into, either directly or indirectly, transactions in securities, with the intention of artificially raising or depressing securities and thereby inducing the sale or purchase of securities by any person; (b)  indulge in any act, which is calculated to create a false or misleading appearance of trading on the securities market; (c)  indulge in any act which results in reflection of prices of securities based on transactions that are not genuine trade transactions; (d)  enter into a purchase or sale of any securities, not intended to effect transfer of beneficial ownership but intended to operate only as a de depress, or cause fluctuations in the market price of securities; (e)  ……….”

Source: SecMarx — sebi:MO/85/IVD/09/04. 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.