sebi:Order/SBM/VS/2022-23/16310

SEBI · SEBI · 2013-04-30 · Suresh Menon, Adjudicating Officer

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Noticee found in violation; certificate of registration as stock broker suspended for six months

Provisions invoked

• s. 11
• s. 15A
• s. 15
• s. 15J
• s. 12A
• s. 11C(6)
• s. 12
• s. 11C
• s. 28A
• s. 11C(2)
• s. 11C(3)

Regulations relied on

• SEBI (PFUTP) Regulations, 2003
• SEBI (PFUTP) Regulations, 2003 — 3(a)

Parties

• Vishal Vijay Shah

Holding

The Noticee, a registered stock broker, was held to have violated sections 11C(2) and 11C(3) of the SEBI Act by failing to comply with summonses, and sections 12A(a), (b) and (c) of the SEBI Act read with Regulations 3(a)-(d), 4(1) and 4(2)(p) of the PFUTP Regulations and Clauses A(1) and A(5) of the Code of Conduct under Schedule II of the Stock Broker Regulations by issuing fictitious documents to Laxmi and Viraj without registering them as clients or executing trades. The Noticee's certificate of registration as a stock broker was suspended for a period of six months.

Full text

___________________________________________________________________________ Adjudication Order in respect of Vishal Vijay Shah in the matter of Front–Running by Manish Chaturvedi & Others Page 2 of 22 a. 9 entities viz. Mr. Bhavesh Gadhavi (‘Bhavesh’), E Ally Consulting India Pvt. Ltd. (‘E- Ally’), Josh Trading Pvt. Ltd. (‘Josh’), Ms. Laxmi Chaturvedi (‘Laxmi’), Pinky Auto Finance Ltd. (‘Pinky’), Shree Jaisal Electronics & Industries Ltd. (‘Jaisal’), Viraj Mercantile Pvt. Ltd. (‘Viraj’), Mr. Anandilal Chanda (‘Anandilal’) and Anandilal Chanda HUF (‘Chanda HUF’) were, prima facie, observed to be front running the trades of the Sterling Group/ its clients during the period under investigation, b. 8 persons/entities, viz. Mr. Manish Manoharlal Chaturvedi (‘Manish’), Mrs. Madhu Chanda (‘Madhu’), Anandilal, M/s. Sharekhan Limited, Mr. Manoharlal Bhaiyalal Chaturvedi (‘Manohar’), Mr. Abhinandan Ranka (‘Abhinandan’), Mr. Sandeep Maloo (‘Sandeep’) and Mr. Praveen Kumar Jain (‘Praveen’) had allegedly aided/ abetted /facilitated in the front running activities of these entities, c. 10 companies /entities of the ‘Sterling Group’ whose trades in various scrips were front- run viz. Abhi Ambi Financial Services Limited, Sterling Futures & Holidays Limited, Ratha Infrastructure Pvt Limited, Baghmar Finlease Pvt Limited, Shanmugha Home Makers Pvt Limited, Siva Trade Consultancy Pvt Limited, Saravana Enterprises, Shanmuga Real Estate & Promoters Pvt Limited, V.S Net Limited and Siva Projects

___________________________________________________________________________ Adjudication Order in respect of Vishal Vijay Shah in the matter of Front–Running by Manish Chaturvedi & Others Page 3 of 22 as ‘Stock Broker Regulations’). In view of the above reasons, adjudication proceedings have been initiated against the Noticee under the provisions of sections 15HA and 15HB of the SEBI Act.

___________________________________________________________________________ Adjudication Order in respect of Vishal Vijay Shah in the matter of Front–Running by Manish Chaturvedi & Others Page 4 of 22 undersigned was appointed as the Adjudicating Officer (‘AO’) in the matter vide order dated May 10, 2018. It is noted from the related files that the then AOs had referred the matter to the concerned Department of SEBI seeking certain clarifications /modifications w.r.t the communique and appointment order of the AO. The concerned department of SEBI vide order dated October 03, 2018 had modified the communication order w.r.t the appointment of the AO. Thereafter, pursuant to the transfer of the undersigned to another department of SEBI, Dr. Anitha Anoop was appointed as the Adjudicating Officer in the matter vide order dated March 18, 2019. Subsequently, the undersigned was again appointed as the AO in the matter pursuant to the transfer of Dr Anitha Anoop, vide communique dated November 3, 2020. SHOW CAUSE NOTICE, HEARING AND REPLY

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