sebi:RA/JP/193-214/2017
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Facts / Headnote
Penalties imposed on multiple Noticees for violations of PFUTP Regulations, Stock Brokers Regulations, and PIT Regulations; allegations of price manipulation against Noticee No. 1, 3-14 and 20 not established; PIT violation against Noticee No. 20 not established.
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 7
- Reg. 3
- Reg. 13
- Reg. 15
- Reg. 3(a)
Holding
The Adjudicating Officer held that Noticee No. 1-18 and 20 violated PFUTP Regulations by creating artificial volume and misleading appearance of trading, Noticee No. 1-5 and 10-17 made unlawful gain of ₹1,60,76,904, Noticee No. 21 and 22 violated Stock Brokers Regulations, while price manipulation allegations against Noticee No. 1, 3-14 and 20 and PIT violation against Noticee No. 20 were not established.
Full text
Page 2 of 31 BACKGROUND 1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) had conducted investigation in the shares of Sarang Chemicals Ltd. (SCL) to ascertain whether the suspected entities had manipulated price / volume of the scrip in violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’), the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 (hereinafter referred to as ‘Stock Brokers Regulations’) and the SEBI (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as ‘PIT Regulations’) during the period January 03, 2011 to June 08, 2011 (hereinafter referred to as “Investigation Period / IP ”).
Page 3 of 31 APPOINTMENT OF ADJUDICATING OFFICER 3. SEBI had initiated adjudication proceedings and appointed the undersigned as Adjudicating Officer vide order dated July 13, 2015 to inquire into and adjudge under section 15 A(b), 15 HA and 15 HB and of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') read with rule 3 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as ‘Adjudication Rules’) the aforesaid violations of PFUTP Regulations, Stock Brokers Regulations and PIT Regulations, alleged to have been committed by the Noticee(s).
Page 4 of 31 out possible indulgence / execution of trades at the price more than the LTP or price less than the LTP in order to artificially inflate or deflate the price of the scrip or any manipulation of price in the scrip. It was revealed that 16 entities / Noticee(s) of the Group had traded among themselves and contributed positive impact in the price of scrip of ₹1.86 (i.e. 22.36 % of market positive LTP) as compared to LTP. In view of the trading by the 16 entities (viz. Noticee No. 1-14 and 19-20) among themselves in executing buy / sell order at the price higher than the LTP, it was alleged that they have manipulated price of the scrip by contributing 22.36% of market positive price rise in the scrip as compared to LTP and thereby had violated the provision of regulation 3 (a) to (d), 4 (1) & 4 (2) (a), (b), (e) & (g) of the PFUTP Regulations.
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Source: SecMarx — sebi:RA/JP/193-214/2017. 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.