sebi:ORDER/NH/KL/2022-23/24398-24403

SEBI · SEBI · 2021-09-07 · N Hariharan, Adjudicating Officer

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

Facts / Headnote

Charges established against all six Noticees; monetary penalties imposed under Section 15HA of the SEBI Act

Provisions invoked

• s. 15
• s. 19
• s. 12A
• s. 12
• s. 15H
• s. 15J
• s. 15Z

Regulations

• Reg. 3
• Reg. 4(1)
• Reg. 200

Parties

• Mr. Brij Bhushan (Noticee no. 1)
• Mr. Parth Bhushan (Noticee no. 2)
• Mrs. Kalpna Ajaykumar Min (Noticee no. 3)
• Mr. Mahaveer Yeswanti Bai (Noticee no. 4)
• Mr. Ashwin Jamnudas Merchant (Noticee no. 5)
• Mr. Ramavadh Jangu Yadav (Noticee no. 6)

Holding

The Adjudicating Officer held that all six Noticees violated Section 12A(a), (b), (c) of the SEBI Act and Regulations 3(a)-(d) and 4(1), 4(2)(a) of the PFUTP Regulations by creating a misleading appearance of trading and generating artificial volume in the scrip of Srestha Finvest Limited (SFL) during the investigation period of February 05, 2018 to February 27, 2018. Penalties were imposed: Rs. 10,00,000 jointly and severally on Noticees 5 and 6; Rs. 7,00,000 jointly and severally on Noticees 1 and 2; Rs. 5,00,000 each on Noticees 3 and 4.

Full text

Adjudication Order in the matter of Srestha Finvest Limited Page 2 of 71 Regulations’) during the period from February 05, 2018 to February 27, 2018 (hereinafter referred to as ‘Investigation period’), if any.

Adjudication Order in the matter of Srestha Finvest Limited Page 3 of 71 APPOINTMENT OF ADJUDICATING OFFICER 4. Shri Suresh B Menon was appointed as the Adjudicating Officer (hereinafter referred to as ‘AO’) in the matter vide communique dated September 07, 2021 under Section 19 of the SEBI Act read with Section 15-I of the SEBI Act and Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 (hereinafter referred to as ‘Adjudication Rules’) to inquire into and adjudge the aforementioned alleged violations of the provisions of law by the Noticees, under the provisions of Section 15HA of the SEBI Act. Pursuant to the superannuation of Shri Suresh B Menon, the undersigned was appointed as AO in the instant matter vide communique dated June 07, 2022.

Adjudication Order in the matter of Srestha Finvest Limited Page 4 of 71 following major observations are made in the aforesaid BSE examination report: i. There were several Short Message Services (‘SMSs’), circulated in the market giving the ‘buy’ recommendation for the scrip of SFL during the investigation period. ii. The price of the scrip of SFL rose from Rs. 12.25 to high of Rs. 15.93 and closed at Rs. 12.72 during the investigation period. iii. Top three net sellers w.r.t. trading in the scrip of SFL during the investigation period were Mr. Mahaveer Yeswanti Bai, Mr. Brij Bhushan and Ms. Renu Bhushan, who were also the shareholders of SFL (holding 1% of shares each) during the quarter ending December 2017. iv. It is observed that the aforesaid three net sellers have altogether net sold 6,19,580 shares of SFL accounting to 23.67% of the total market volume and 94% of net volume during the investigation period when the SMSs were circulated in the market. In this regard, it was alleged that the SMSs may have been circulated to provide exit to the aforesaid three entities.

Source: SecMarx — sebi:ORDER/NH/KL/2022-23/24398-24403. 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.