sebi:ORDER/NH/KL/2022-23/23457

SEBI · SEBI · 2021-05-31 · N Hariharan, Adjudicating Officer

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Facts / Headnote

Proceedings disposed of without imposing monetary penalty

Provisions invoked

• s. 15
• s. 19
• s. 11(1)
• s. 15H
• s. 15I

Regulations

• Reg. 9
• Reg. 9(1)

Parties

• Mr. Mahendrabhai Ramniklal Shah

Holding

The allegation that the Noticee, as compliance officer of Veeram Ornaments Limited, failed to remit to SEBI the profits earned from contra trades by three promoter entities could not be conclusively established, and the proceedings were disposed of without imposing any monetary penalty.

Full text

Adjudication Order in respect of Mr. Mahendra Ramniklal Shah in the matter Veeram Ornaments Limited Page 2 of 17 i. it is alleged that the execution of said trades by the three entities was in contravention of securities laws i.e. Clause 10 of Schedule B Minimum Standards for Code of Conduct to Regulate, Monitor and Report Trading by designated persons read with Regulation 9 (1) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (hereinafter referred to as ‘PIT Regulations’). ii. the profits earned from such trades have not been disgorged and remitted to SEBI as stipulated under Clause 10 of Schedule B Minimum Standards for Code of Conduct to Regulate, Monitor and Report Trading by designated persons read with regulation 9(1) of SEBI (PIT) Regulations, 2015. iii. as per SEBI (PIT) Regulations, 2015, it is the responsibility of the compliance officer of the company to administer the code of conduct and monitor compliance with the regulations. iv. the compliance officer of Veeram during the relevant period was one Mr. Mahendrabhai Ramniklal Shah (hereinafter referred to as ‘Noticee’).

Adjudication Order in respect of Mr. Mahendra Ramniklal Shah in the matter Veeram Ornaments Limited Page 3 of 17 5. It is pertinent to mention that incidentally in the instant matter, proceedings were also initiated before the Whole Time Member – SEBI under Section 11(1), 11(4), 11(4A), 11B(1) and 11B(2) of the SEBI Act, against entities who executed the alleged contra trades during the investigation period. I note that the allegations made against the said three promoter entities of Veeram arise out of the same investigation as in the instant matter.

Adjudication Order in respect of Mr. Mahendra Ramniklal Shah in the matter Veeram Ornaments Limited Page 4 of 17 Act, 1992 for the violations alleged to have been committed by the Noticee. The relevant extract of the SCN is reproduced in verbatim below: i. Upon analysing the trade details of promoters/ directors/ designated persons of the company, viz. Rakshit Mahendrabhai Shah HUF (hereinafter referred to as “Rakshit HUF”), Rakshit Mahendra Shah (hereinafter referred to as “Rakshit Shah”) and Pinal Rakshitbhai Shah (hereinafter referred to as “Pinal Shah”) during the investigation period, it was observed that the said persons/entities had executed contra trades within 6 months of their prior transaction in the scrip of Veeram Ornaments Limited. ii. It was observed that Rakshit HUF, Rakshit Shah and Pinal Shah have made profits of Rs.19,98,000, Rs.25,66,500 and Rs.45,30,000 respectively, by executing contra trades in the scrip of the company. iii. Further, it is observed that the profits from such contra trades has not been disgorged and remitted to SEBI as stipulated under Clause 10 of Schedule B Minimum Standards for Code of Conduct to Regulate, Monitor and Report Trading by designated persons read with regulation 9(1) of SEBI (PIT) Regulations, 2015. iv. As per PIT Regulations, it is the responsibility of the compliance officer of the company to administer the code of conduct and monitor compliance with the regulations. It is alleged that the company has failed to disgorge

Source: SecMarx — sebi:ORDER/NH/KL/2022-23/23457. 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.