sebi:SD/AO/09/2010
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Facts / Headnote
Allegation of violation of PFUTP Regulations not proved; held guilty of violation of Clause A(2) of Code of Conduct and penalty of Rs. 50,000 imposed under Section 15HB
Provisions invoked
- s. 15
- s. 15H
- s. 15I
- s. 15J
Regulations
- Reg. 7
- Reg. 4
- Reg. 3
- Reg. 4(1)
Parties
- M/s Shriram Insight Share Brokers Ltd.
Holding
The Noticee was held not to have violated Regulation 4(1) and 4(2)(a), (b), (e), (g) and (n) of the PFUTP Regulations, 2003, but to have violated Clause A(2) of the Code of Conduct for Stock Brokers for failure to exercise due skill, care and diligence, and was imposed a monetary penalty of Rs. 50,000 under Section 15HB of the SEBI Act.
Full text
Page 2 of 12 some other clients, certain entities transacted in the shares of AEL in such a manner that led to creation of artificial volumes in the scrip which was designed to create a false market and distort market equilibrium leading to spurt in the price of the scrip which did not have any correlation with the performance of the company.
Page 3 of 12 6. Accordingly, a notice to show cause dated June 23, 2008 under Rule 4 (1) of the Rules was issued to the Noticee asking it to show cause as to why an enquiry should not be held against it in terms of Section 15I of the SEBI Act and penalty be not imposed under Section 15HA and 15HB of the SEBI Act for the alleged violation by it of the abovementioned provisions of the PFUTP Regulations and the Broker Regulations.
Page 4 of 12 (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely :— (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or avoidance of loss; … (e) any act or omission amounting to manipulation of the price of a security; … (g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security; … (n) circular transactions in respect of a security entered into between intermediaries in order to increase commission to provide a false appearance of trading in such security or to inflate, depress or cause fluctuations in the price of such security;”
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Source: SecMarx — sebi:SD/AO/09/2010. 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.