sebi:PKK/AO/154/2010
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Facts / Headnote
Penalty imposed on the Noticee for fraudulent and unfair trade practices
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4(1)
Parties
- Shri Ramasudhakaran Menon
Holding
The Noticee, Shri Ramasudhakaran Menon, was held to have violated Regulations 4(1), 4(2)(a) and 4(2)(e) of the PFUTP Regulations, 2003 by indulging in fraudulent and unfair trade practices in the scrip of MCL, and a penalty of Rs. 1,00,000 was imposed under Section 15HA of the SEBI Act.
Full text
Page 2 of 11 of 269% in just four months. The scrip had an average daily volume of 34, 532 shares. 2. During the investigation it was found that certain entities connected to each other acting as clients with some brokers carried out large number of trades both off market and on market in the scrip of MCL. The transfer of shares of MCL in the off market among the entities further established the linkages between them. These entities used to complete many of the market obligations by the shares received through off market transfers. They were involved in creation of artificial volume and liquidity which led to price increase to unrealistic levels as mentioned above. Investigation revealed that Shri Ramasudhakaran Menon (hereinafter referred to as the ‘Noticee’) was one of the connected entities found involved in dealing in the scrip of MCL in the above manner during the investigation period.
Page 3 of 11 Appointment of Adjudicating Officer 4. In view of the above SEBI vide order dated May 10, 2007 appointed Ms. Babita Rayudu as Adjudicating Officer (AO) under Section 15 I of the SEBI Act (hereinafter referred to as the ‘SEBI Act’) read with Rule 3 of SEBI (Procedure for holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 (hereinafter referred to as the ‘Adjudicating Rules’) to inquire into and adjudge under Section 15 HA of the SEBI Act, the alleged violation by the Noticee of the abovementioned provisions of the SEBI Act. Consequent to Mrs. Rayudu being sent on deputation, Mr. Sandeep Deore was appointed as the AO vide SEBI Order dated November 23,
Page 4 of 11 The Noticee was found to have traded in the scrip though his broker M/s. Vijay Bhagwandas & Co and M/s. Jaypee Capital Services Ltd. where he bought 22,585 and sold 1,84,648 shares during the investigation period. He was also found to have received 2,26,484 shares from the connected entities and also transferred a total of 37,500 shares to Shri Harish Sujan, Shri Ghanashyam Sujan and Shri Neel Sujan who were also related by common address through off market transactions. He is thus alleged to have acted together with the entities to trade fraudulently in the scrip of MCL. It was also alleged that the Noticee is related to the promoter entity M/s. Stardom Trading Co. Pvt. Ltd. (Stardom) as he had received shares of MCL from Ms. Manju Hirachand Salecha, director of Stardom.
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Source: SecMarx — sebi:PKK/AO/154/2010. 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.