sebi:Order/GR/AE/2020-21/7535-7541
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Provisions invoked
- s. 15
- s. 12A
- s. 15H
- s. 15I
- s. 15J
- s. 28A
Regulations
- Reg. 7
- Reg. 4
- Reg. 3
- Reg. 9
- Reg. 17
- Reg. 3(a)
Parties
- Fidelity Multitrade Pvt. Ltd.
- Pasha Finance Pvt. Ltd.
- Bharat Jayantilal Patel
- Acira Consultancy Pvt. Ltd.
- Finquest Securities Pvt Ltd
- Nirshilp Commodities and Trading Pvt. Ltd.
Holding
The Adjudicating Officer rejected the Noticees' plea to withdraw the Show Cause Notice on grounds of inordinate delay, holding that delay in initiating proceedings cannot be a ground to quash penalty proceedings. The AO noted delay was attributable to investigation complexity and that record-keeping obligations under Stock Broker Regulations are for a 'minimum' of 5 years.
Full text
Page 2 of 44 the period December 15, 2011 to October 09, 2014. (hereinafter referred to as “Investigation period”). 2. During investigation, a group of 16 connected entities were identified based on the KYC documents, MCA details, bank account statements and off-market transactions to be investigated (herein after referred to as “Bharat Patel Group”). The investigation revealed that Noticee 1 to 4 (viz. Fidelity Multitrade Pvt. Ltd., Pasha Finance Pvt. Ltd, Bharat Jayantilal Patel, and Acira Consultancy Pvt. Ltd., respectively) who are connected to each other and part of the said larger Bharat Patel Group, executed circular trades in the scrip of Seshasayee at NSE and BSE during the investigation period. The said circular trades of the aforementioned Noticees constituted 21.10% and 25.27% of total market traded volume at NSE and BSE and created misleading appearance of trading in the said scrip without any intention of change in ownership of the security. Accordingly, it was alleged that Noticee Nos. 1 to 4 have violated the provisions of Sections 12A(a),(b),(c) of the SEBI Act, 1992 read with Regulations 3(a),(b),(c),(d), 4(1), 4(2)(a) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’).
Page 3 of 44 regulation 7 became regulation 9), and was thus alleged to have violated the aforesaid provisions. 4. Investigations further observed that Noticee 6 viz. Nirshilp Commodities and Trading Pvt. Ltd (hereinafter referred to as “Nirshilp”), was the top contributor towards the positive Last Traded Price (LTP) in the scrip of Seshasayee at BSE during the investigation period, wherein it contributed Rs. 3051.3 (30.56% of total market positive LTP) in 1,314 trades for 1,456 shares. It was alleged that of 1,314 positive LTP trades, Nirshilp (i) repeatedly placed buy orders above prevailing sell orders rate with negligible buy order quantity, (ii) repeatedly matched sell orders that are placed above LTP with market orders, with negligible buy order quantity and (iii) repeatedly executed self-trades in negligible quantity. It was thus alleged that Nirshilp traded in a manner which led to a misleading appearance of trading in the scrip and manipulated the price of the scrip of Seshasayee in violation of Sections 12A(a),(b),(c) of the SEBI Act, 1992 read with Regulations 3 (a), (b), (c), (d), 4(1), 4(2)(a),(b),(e) and (g) of PFUTP Regulations.
Page 4 of 44 APPOINTMENT OF ADJUDICATING OFFICER 6. The undersigned was appointed as the Adjudicating Officer (AO) by SEBI vide Order dated May 16, 2019 to inquire into and adjudge under Section 15HA and 15HB of the SEBI Act, 1992, the aforesaid violations alleged to have been committed by the Noticees.
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Source: SecMarx — sebi:Order/GR/AE/2020-21/7535-7541. 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.