sebi:ORDER/NH/RJ/2024-25/31232-31234

SEBI · SEBI · 2024-02-22 · N Hariharan, Chief General Manager and 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

Penalties imposed on all three Noticees for violations of Sections 12A(a), (b), (c) of the SEBI Act read with PFUTP Regulations

Provisions invoked

• s. 11
• s. 15
• s. 19
• s. 15H
• s. 15J
• s. 11C(7)

Regulations

• Reg. 3
• Reg. 3(a)
• Reg. 18

Parties

• Mr. Vijay Pujara
• Mr. Ajay Pujara
• Mr. Natvarbhai Vegda

Holding

The Noticees were held liable for market manipulation in the scrip of Kavit Industries Limited through use of 20 front entities to create artificial volume via synchronized, reversal, and circular trades, in violation of Sections 12A(a), (b), (c) of the SEBI Act read with PFUTP Regulations. Penalties of Rs. 10,00,000, Rs. 6,00,000, and Rs. 5,00,000 were imposed on Noticee Nos. 1, 2, and 3 respectively under Section 15HA.

Full text

Adjudication Order in the matter of trading activities of certain entities in the scrip of Kavit Industries Limited Page 2 of 98 and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’).

Adjudication Order in the matter of trading activities of certain entities in the scrip of Kavit Industries Limited Page 3 of 98 should not be held and penalty be not imposed against the Noticees under Section 15HA of SEBI Act for the aforesaid alleged violations.

Adjudication Order in the matter of trading activities of certain entities in the scrip of Kavit Industries Limited Page 4 of 98 used to receive cheque book every 2-3 months and Noticee No. 3 used to take his signature on all the cheques and keep the cheque book with him. 7.2.7. The buy/ sell orders of the front entities in the scrip of KIL were placed online. Further, Noticee No. 1 had also placed orders online. It has been observed that the MAC IDs used for placing the orders of some front entities matched with the MAC IDs used by Noticee No. 1 for placing his orders. Noticee No. 1 confirmed that the orders for his trades were placed by him only. 7.2.8. Noticee No. 1 was doing financing business and also confirmed that all the front entities were his financing clients (except for one entity namely, Vijay Ishvarbhai Chauhan). Noticee No. 1 stated that he has heard the name “Vijay Ishvarbhai Chauhan” but could not confirm if he had lent money to him as he has lost two registers containing details of clients. 7.2.9. Noticee No. 1 stated that he had introduced around 5-6 clients to a stock broker but he doesn’t remember whether those clients are a part of 20 front entities. Further, he stated that he had introduced 5-6 clients to his brother, Noticee No. 2. It was also observed that Noticee No. 2 had introduced seven front entities (who are part of group of 20 front entities) to a stock broker. Noticee No. 2 also deposited cash in the bank accounts of two front entities on the

Source: SecMarx — sebi:ORDER/NH/RJ/2024-25/31232-31234. 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.