sebi:RA/DPS/06/2015

SEBI · SEBI · 2015-04-23 · Rachna Anand, Adjudicating Officer / General Manager

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Facts / Headnote

Penalty imposed on both Noticees for violation of PFUTP Regulations and Stock Brokers Regulations

Provisions invoked

• s. 15
• s. 15H
• s. 15J

Regulations

• Reg. 7
• Reg. 3
• Reg. 4(1)
• Reg. 4(2)(g)

Parties

• Nikhil Securities Limited (Noticee No. 1)
• Genuine Stock Brokers Pvt. Ltd (Noticee No. 2)

Holding

The Adjudicating Officer held that Noticee No. 1 (Nikhil Securities Limited) violated Regulation 4(2)(g) of the PFUTP Regulations by executing 171 self trades, and Noticee No. 2 (Genuine Stock Brokers Pvt. Ltd) violated Clause A(2) of the Code of Conduct for Stock Brokers by acting as broker and counterparty broker for those self trades. A penalty of Rs. 15,00,000 was imposed on Noticee No. 1 under Section 15HA and Rs. 10,00,000 on Noticee No. 2 under Section 15HB of the SEBI Act.

Full text

Page 2 of 14 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’). Further, it is also alleged that the Noticee No. 2 by acting as broker on buy side and sell side on all the occasion for his client Noticee No. 1 (Nikhil) and hence failed to exercise due skill and care; and thereby, the Noticee No. 2 (Genuine) had allegedly violated Clause A(2) of the Code of conduct for Stock Brokers as stipulated in schedule II read with Regulation 7 of the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 (hereinafter referred to as ‘Stock Brokers Regulations’).

Page 3 of 14 of rule 4(3) of the Rules, the Noticees were granted an opportunity of personal hearing on August 19, 2015 at 11:00 a.m. to Noticee No. 1 (Nikhil) and August 19, 2015 at 3:00 p.m. to Noticee No. 2 (Genuine) vide separate notice dated August 06, 2015. • Noticee No. 1 (Nikhil) vide its letter dated August 13, 2015 submitted that we have already submitted our response in the matter vide letter dated July 30, 2015 and please note that we are not deputing any person for personal hearing. • Noticee No. 2 (Genuine) vide its letter dated August 13, 2015 submitted that we have already submitted our written reply in the matter vide letter dated July 30, 2015 and we do not wish to appear in person.

Page 4 of 14 different terminals is a common phenomenon and there may not be any meeting of minds. Further on the same days i.e. 13th to 15th July & 18th July, 2011 we have also dealt with approximately 170 other scrips and hence in such large volume of trades, self trades are inevitable. • We confirm that our dealing in the scrip was merely jobbing & arbitrage activity and our intention was not to inflate, depress or cause fluctuations in the price of scrip for wrongful gain or avoidance of loss. Further, we have not indulged in any activity which creates false or misleading appearance of trading in securities market. • We confirm that we are not directly or indirectly involved in buying, selling or otherwise dealing in the scrip in a fraudulent manner and have not used or employed any manipulative or deceptive device, scheme or artifice to defraud or contrivance in contravention of the provisions of SEBI Act or rules or the regulation made there under. • Further, we confirm that we are not engaged in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with dealing in the scrip in contravention of the provisions of the Act or the rules and the regulations made there under. • We are not connected, directly or indirectly, to any promoter / director / key managerial employee of the said company i.e. Readymade Steel India Ltd.

Source: SecMarx — sebi:RA/DPS/06/2015. 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.