sebi:PG/AO-94/2011
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Penalty imposed on the Noticee for violation of PFUTP Regulations
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 4
- Reg. 3
- Reg. 4(a)
Parties
- M/s. Rajesh N. Jhaveri (proprietor - Mr Gautam N. Jhaveri)
Holding
The Noticee, M/s. Rajesh N. Jhaveri, was held to have violated regulations 4(1), 4(2)(a), (b), (e) and (g) of the PFUTP Regulations by indulging in synchronized circular/reversal trades in the scrip of AEL, and a penalty of Rs. 3,00,000 was imposed under section 15HA of the SEBI Act.
Full text
Page 2 of 19 Entities which traded on NSE S. No. Name of Broker Name of Sub-broker Name of Client 1 Grishma Securities Pvt. Ltd --- Rajesh N Jhaveri 2 Mangal Keshav Securities Ltd E Stocks INC Dilip Champalal Jain 3 ASE Capital Markets Ltd --- Manoj T Shah 4 Sanchay Finvest Ltd --- Tejas Ghelani 5 M.G. Capital --- Bela H Kayastha (Bela Piyushbhai Jhaveri) 6 Inventure Growth & Securities Ltd --- Mangeram S Sharma
Page 3 of 19 inquiry should not be held against the Noticee and penalty be not imposed under sections 15HA and 15HB of SEBI Act for the alleged violations specified in the said SCN. The Noticee vide letter dated June 25, 2006 responded to the SCN raising an issue which was clarified vide SEBI’s letter dated June 27, 2006. Further, vide notice dated August 12, 2009, the Noticee was advised that a reply should be made on merits and was also informed about personal hearing scheduled on August 25, 2009. The Noticee vide letter dated August 20, 2009 stated that consent application has been filed and requested for the Adjudication Proceedings to be kept in abeyance. However no communication with regard to the consent application of the Noticee was received from the concerned department. Hence in the interest of natural justice another opportunity was given to the Noticee by scheduling a personal hearing on February 22, 2010 which was informed to the Noticee vide notice dated February 5, 2010. Shri. Anish Kharidia appeared on behalf of the Noticee for the scheduled personal hearing and submitted that a detailed reply will filed no later than 30 days.
Page 4 of 19 addition to the same, what is further significant and pertinent to note is that nothing has been placed on record which goes to even remotely show or indicate that the fraud has been committed on account of indulgence of such trades. In absence of establishing the fraud has been committed it is incorrect to say that other investors in the market get an impression that these are not genuine prices of the scrip. Not only that, it is further incorrect to say that such low volume of transactions induce others to invest in the scrip at those prices which are not genuine. The Noticee categorically contended that no violation has occurred on account of such alleged trades. The background of the facts given in the show cause notice also is not suggestive, in any manner, of the fact that the Noticee had created false market either singly or in concert with others or have indulged in any act detrimental to the investor’s interest or which leads to interference with the fair and smooth functioning of the market. So far as the alleged violation of the provisions of regulations 4 (1), 4 (2) (a), (b), (e), (g) and (n) of PFUTP Regulations, Noticee submitted that nothing is there on record to show that it was guilty of any such violations.
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Source: SecMarx — sebi:PG/AO-94/2011. 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.