sebi:PKK/AO/155/2010
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Facts / Headnote
Noticee found in violation and penalty of Rs. 2,00,000 imposed
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4(1)
Parties
- M/s. Fineline Mercantile Company Pvt. Ltd.
Holding
The Noticee violated Regulations 4(1), 4(2)(a) and 4(2)(e) of the PFUTP Regulations, 2003 by creating artificial volume and price rise in the scrip of MCL and is liable for penalty under Section 15HA of the SEBI Act, with a penalty of Rs. 2,00,000 imposed.
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 M/s. Fineline Mercantile Company Pvt. Ltd. (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 its broker M/s. Indiabulls Securities Pvt. Ltd. The Noticee bought 1,66,000 shares from M/s. Goldcity Exports Pvt. Ltd. who in turn received the same from the promoter entity Cute Production Pvt. Ltd. The Noticee is alleged to be related to the entities who have traded in MCL through common address and common phone number. The Noticee is alleged to have executed 4 matched trades for 1,40,000 shares constituting 84.34% of the quantity sold by it. The Noticee is also alleged to have transferred huge amounts of funds to Newleader Trading Company Pvt. Ltd., Rightstar Trading Company Limited, Deepak Narvekar and Deepak Todkar.
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Source: SecMarx — sebi:PKK/AO/155/2010. 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.