sebi:WTM/KMA/ISD/218/02/2010
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Facts / Headnote
Confirmed - interim directions dated May 28, 2009 continued
Provisions invoked
- s. 19
Regulations
- Reg. 3
- Reg. 4(2)(q)
- Reg. 4(q)
Parties
- Mr. Dipak Patel
- Mr. Kanaiyalal Baldev Patel
- Mr. Anandkumar Baldevbhai Patel
- M/s Bhoomi Industries
Holding
The Whole Time Member confirmed the ad interim ex-parte directions dated May 28, 2009 against Mr. Dipak Patel, Mr. Kanaiyalal Baldev Patel, Mr. Anandkumar Baldevbhai Patel and M/s Bhoomi Industries and rejected their pleas to revoke or modify the same pending investigation.
Full text
Page 2 of 10 their respective names. It was alleged that the parties have contravened the provisions of Regulations 3 & 4 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the PFUTP Regulations). Mr. Dipak Patel and Mr. Kanaiyalal Baldev Patel filed their objections to the
Page 3 of 10 3. Mr. Dipak Patel in his objections had inter alia stated that impugned directions were passed without any notice and therefore contrary to the provisions of law. This argument would not benefit him, in view of the express provisions in the Securities and Exchange Board of India Act, 1992 (the Act), which empowers SEBI to pass interim directions. The Order was passed by SEBI pursuant to the preliminary findings of the investigation in the matter. He contended that the reply of Mr. Kanaiyalal Baldev Patel to the summons of SEBI dated May 2, 2009 has not been considered. In this regard, I note that SEBI had issued summons dated May 2, 2009 to Mr. Kanaiyalal Baldev Patel to file certain information by May 11, 2009. Instead of filing the said information as directed by SEBI within the stipulated time, Mr. Kanaiyalal Baldev Patel, vide letter dated May 11, 2009 had sought two weeks time for submission of the information.Subsequently, the said information was received by SEBI only on June 1, 2009, after the issuance of the interim order on May 28, 2009. Thus, the contention that SEBI had not considered the reply of Mr. Kanaiyalal Baldev Patel would not arise. In terms of the preliminary findings, during the period between January 1, 2007 and March, 2009, Mr. Kanaiyalal Baldev Patel, while trading ahead of Passport India in 228 scrip days had bought and sold equal number of shares in all the 228 scrip days. The contention of Mr. Dipak Patel was that he did not discuss
Page 4 of 10 and Passport as he placed the buy-sell orders for Passport. It was also found that a number of telephone calls were exchanged between Mr. Dipak Patel, Mr. Kanaiyalal Baldev Patel and Mr. Anandkumar Baldevbhai Patel, during the relevant period. Mr. Kaniayalal Baldev Patel was seen to have been placed orders ahead of Passport during the period between January 1, 2007 and March 2009 in 228 scrip days. His trading pattern involved reversing the previous buy-sell trades entered into by him, with the subsequent trade orders placed by Passport. While doing so, Mr. Kanaiyalal Baldev Patel had benefited monetarily from the price fluctuations caused by the orders placed by Passport. In this regard, it has been contended that Mr. Kanaiyalal Baldev Patel had dealt in 34 scrips and that only, 17 scrips were common between him and Passport. The said contention is not appealing in the light of the facts and circumstances of the case. It was seen that in out of 228 scrip days, 214 scrip days were common between Passport and Mr. Kanaiyalal Baldev Patel. It was also noted that in 76 scrip days, the matched quantity between Passport and Mr. Kanaiyalal Baldev Patel was greater than or equal to 90%. Further, in 48 scrip days, the buy-sell quantity of Mr. Kanaiyalal Baldev Patel was greater than that of Passport. Prima facie, the total profit earned by Mr. Kanaiyalal Baldev Patel from such trades was to the tune of Rs.1.13 crore. When there are more than 6000 companies listed on the s
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Source: SecMarx — sebi:WTM/KMA/ISD/218/02/2010. 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.