sebi:PKK/AO/280/2010
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Facts / Headnote
Penalty of Rs. 2,00,000 imposed on the Noticee for violation of Regulations 4(1), 4(2)(a) and 4(2)(e) of PFUTP Regulations, 2003
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4(1)
Parties
- Shri Rajendra Kumar Adukia
Holding
The Noticee was held to have violated Regulations 4(1), 4(2)(a) and 4(2)(e) of the PFUTP Regulations, 2003 by engaging in fraudulent and unfair trade practices in the scrip of MCL, including creating artificial volume and manipulating prices, and a penalty of Rs. 2,00,000 was imposed under Section 15HA of the SEBI Act.
Full text
Page 2 of 12 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 Rajendra Kumar Adukia (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 12 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 12 The Noticee was found to have traded in the scrip though his broker M/s. Jaypee Capital Services Ltd. and M/s. Galaxy Broking Ltd. where he bought 3,97,219 shares and sold 65,345 shares. He had bought the shares when the promoter entity M/s. Stardom Trading Co. Pvt. Ltd. off loaded their shares. He had transferred those shares to several entities through off market which were sold in the market later. The Noticee also put buy order at a higher price than the last traded price of MCL for 1, 80,556 shares regularly as per the annexure to the SCN. He is thus alleged to have acted together with the entities to trade fraudulently in the scrip of MCL.
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Source: SecMarx — sebi:PKK/AO/280/2010. 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.