sebi:WTM/KMA/IVD-ERO/23/12/2008
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Facts / Headnote
Noticee found guilty of violating Regulation 4(2)(a), 4(2)(b) and 4(2)(e) of the FUTP Regulations; prohibited from buying, selling or dealing in securities for a period of one month with immediate effect.
Provisions invoked
- s. 11(4)
- s. 19
Regulations
- Reg. 11
- Reg. 4(2)
Parties
- Mr. Debapriya Ghosh
Holding
The noticee, Mr. Debapriya Ghosh, was held guilty of violating Regulation 4(2)(a), 4(2)(b) and 4(2)(e) of the FUTP Regulations by trading in the shares of the company through synchronized trades that created a misleading appearance of trading and manipulated the share price, and was prohibited from buying, selling or dealing in securities for one month.
Full text
Page 2 of 8 during April 2005 to November 2005. In view of the above, SEBI conducted a preliminary analysis of trading data in respect of buying, selling, dealing in the shares of such companies including the company. It was inter alia observed that the average share price of the company increased from Rs.20.80/- to Rs.88/- during the period May 16, 2005 and November 24, 2005 (hereinafter referred to as the relevant period). Given the above circumstances, in order to protect the interest of investors, SEBI, vide an ad- interim ex parte order dated November 30, 2005 directed various stock brokers, including stock broker namely, M/s Dinesh Kumar Lodha (Member, CSE) not to buy, sell or deal in securities, in any manner, either directly or indirectly, till further directions, as they had prima facie violated the provisions of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the FUTP Regulations) and Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations, 1992. Subsequently, SEBI, after affording an opportunity of hearing to the aggrieved persons, vide order dated May 31, 2006, confirmed directions passed vide ad interim order dated November 30, 2005, as stated therein. The investigation conducted by SEBI inter alia observed that Mr. Debapriya Ghosh (hereinafter referred to as the noticee) traded substantially in the shares of the com
Page 3 of 8 entities including the noticee asking him to show cause as to why directions under Sections 11, 11B and 11(4) of Securities and Exchange Board of India Act,1992 (hereinafter referred to as the Act) read with Regulation 11 of the FUTP Regulations, should not be issued against him, as stated therein. As no reply was received from the noticee, SEBI, vide letter dated February 21, 2007 granted another opportunity to file his reply. Thereafter, the noticee, vide letter dated March 15, 2007, inter alia stated that the subject matter of the show cause notice was never within his knowledge. He further stated that he was an employee of one 'Beekay & Associates' for the period 2002 to May 26, 2006. The proprietor of the said Beekay & Associates was one Binod Kumar Banthia. He contended that he was sacked from the above job on his refusal to sign on some papers as told by them. He further stated that on May 26, 2006, Mr Binod Kumar Banthia handed over the xerox copy of summons send by SEBI in his name. He pleaded for leniency in the matter. Thereafter, SEBI granted an opportunity to the noticee on May 23, 2008. The noticee appeared on the said date and filed written submissions inter alia stating that he had never signed any document related to the company or investment in securities market. Subsequently, another opportunity of hearing was granted to the noticee on December 19, 2008. The noticee appeared before me on the said date and requested to consider his letters dated
Page 4 of 8 4. The allegation is that the noticee had traded substantially in the shares of the company (35,200) during the relevant period through the stock broker M/s Dinesh Kumar Lodha. The said 35,200 shares accounted for 68% of the total volume of the said stock broker, in the shares of the company. The said stock broker stated that the noticee had appeared before him and signed the client registration form and the member client agreement in his presence. The trades alleged to have executed by the noticee happened to be from July 25, 2005 to September 28, 2005 between the price range Rs.27/- and Rs.86.90/-. The investigation conducted by SEBI observed that during the days of the said trades, share price of the company increased by around 4% on daily basis. The case of the noticee is that, on May 26, 2006 he was sacked from his job on his refusal to sign some papers as per the wishes of the employer. The alleged trades took place in the year 2005. The stock broker through whom the noticee alleged to have executed trades in the shares of the company stated that the noticee appeared before him and executed the Know Your Client (KYC) requirements such as member client agreement and client registration form etc. The noticee does not have case that his employer misused certain papers signed by him. Even according to the noticee, he was sacked from the job on his refusal to sign some papers as per the wishes of his employer. On the other hand, the Broker through whom the notice
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Source: SecMarx — sebi:WTM/KMA/IVD-ERO/23/12/2008. 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.