sebi:WTM/PS/03/IVD/ID-3/APRIL/2010

SEBI · SEBI · 2006-11-02 · Prashant Saran, Whole Time Member

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Facts / Headnote

Charges of violation of Regulation 4(1), 4(2)(a), (b), (e), (g) and (n) of PFUTP Regulations established; noticee restrained from buying, selling or dealing in securities market or accessing the securities market, directly or indirectly, for a period of two years.

Provisions invoked

• s. 11

Regulations

• Reg. 11
• Reg. 13
• Reg. 4(1)

Parties

• Paragon Investments Pvt. Ltd.

Holding

The charges against the noticee of violation of provisions of Regulation 4(1), 4(2)(a), (b), (e), (g) and (n) of PFUTP Regulations read with Regulation 13 of PFUTP Regulations stands established. The noticee is restrained from buying, selling or dealing in securities market whatsoever or accessing the securities market, directly or indirectly, for a period of two years.

Full text

Page 2 of 8 Pvt. Ltd. through Mr. Rajni M. Padalia, Director (hereinafter referred to as ‘noticee’) under Section 11, 11B and 11(4) of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’) read with Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’). The SCN alleged that the noticee was found to have actively traded in the shares of Baffin during the relevant period by placing buy orders through one broker as well as sell order through another broker. Noticee was observed to have executed self trades through two different brokers viz. M/s El Dorado Guarantee Ltd. and Sanghavi Brother Brokerage Ltd. It was alleged that the noticee thereby created artificial volumes in the scrip and also contributed to the price rise in the scrip of Baffin. The SCN, therefore, alleged that the acts of the noticee were in violation of Regulation 4(1), 4(2) (a), (b), (e), (g) and (n) of PFUTP Regulations. Accordingly, it called upon the noticee to show cause as to why suitable directions under Section 11, 11B and 11(4) of SEBI Act read with Regulation 11 of PFUTP Regulations, including restraining it from accessing the capital market and prohibiting from buying, selling or dealing in securities in any manner or whatsoever for a particular period should not be issued against it.

Page 3 of 8 on hold. SEBI, however, did not agree to settle the proceedings by consent as the terms offered by the noticee were not adequate and finally rejected the application on March 02, 2010. Pursuant to such rejection, the present proceedings have been revived from the stage where these were kept on hold.

Page 4 of 8 a. The investigations have found that the noticee was actively trading through M/s El. Dorado Guarantee Ltd. and Sanghavi Brother Brokerage Ltd. during the investigation period. I note that the trades were perfectly matching with negligible time difference. The noticee had major concentration in both sales and purchases during the period of investigations through the said brokers. These brokers had more than 65% concentration in the scrip of Baffin during the relevant period of time. The orders entered by the noticee were limit orders, the price and quantity of the buy and sell orders were found matching. Table A below is the consolidated trading details of the trades executed on behalf of the noticee through M/s El. Dorado Guarantee Ltd. and Sanghavi Brother Brokerage Ltd. during the relevant period of time: Table A El Dorado Guarantee Ltd. Sanghavi Brothers Brokerage Ltd. Date Gross Purchase Gross Sale Net Qty Gross Purchase Gross Sale Net Qty. Total Gross Qty. Total Qty. traded Total Gross Qty. of Paragon as % of total qty. traded.

Source: SecMarx — sebi:WTM/PS/03/IVD/ID-3/APRIL/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.