sebi:WTM/PS/15/IVD/ID-8/NOV/09
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Facts / Headnote
Noticee found guilty of violating Regulation 4(a), (b), (d) and 6(a) of PFUTP Regulations; prohibited from buying, selling or dealing in securities or accessing the securities market for a period of two years
Provisions invoked
- s. 11
- s. 293
- s. 500
- s. 267
- s. 407
Regulations
- Reg. 4
- Reg. 11
- Reg. 4(a)
- Reg. 6(a)
- Reg. 47
Parties
- Mr. Vasant Harikishan Bissa
Holding
The noticee was found guilty of violating Regulation 4(a), (b), (d) and 6(a) of the PFUTP Regulations by indulging in synchronized and circular trading that created artificial volumes and a false market in the scrip of SMR, and by aiding and abetting PIPL in committing fraud on innocent investors. He was prohibited from buying, selling or dealing in securities or accessing the securities market for two years.
Full text
Page 2 of 14 revealed that the promoters and the related entities of SMR bought partly paid-up shares from the market and fraudulently converted these into fully paid-up capital of the company and further offloaded the said shares in the market through Parklight Investments Pvt. Ltd. (hereinafter referred to as ‘PIPL’) and its associates. The trading details of the persons who had traded in the scrip were collected and analyzed along with the data of volumes contributed by the entities traded during the relevant period of time. During the period of investigations, the price of the scrip had fallen from Rs.120 on April 01, 2002 to Rs.36.10 on May 21, 2002. Investigations found that the price of the scrip had fallen by 73% within 6 trading days. Circuit filter was reduced from 20% to 10% w.e.f. May 22, 2002, after this the scrip gradually fell down to Rs. 3.95 on July 31, 2002. It was revealed that a select group of brokers, acting for select group of clients (common/ related) traded substantially in the scrip of SMR during the relevant period and were responsible for creating large volumes and the down fall of the prices. The said group in aggregate contributed 60.08% in terms of gross purchases, 87.21% in terms of gross sales and 97.13% in terms of net sales. The trading details of the said brokers along with there major clients have been brought out as under:
Page 3 of 14 group of clients/ brokers involved in circular trading/ synchronized trading and had traded actively in the scrip of SMR during the relevant period, created artificial volumes and false market in the scrip. The SCN therefore alleged that the acts of noticee were in violation of the provisions of Regulations 4(a), (b) & (d) and 6(a) of PFUTP Regulations. Accordingly, it called upon the noticee to show cause as to why suitable directions under Section 11, 11(4) and 11B of SEBI Act read with Regulation 11 and 13 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, including restraining him from accessing the securities market and prohibiting from buying, selling or dealing in the securities for a specific period should not be issued against him.
Page 4 of 14 a. No evidence to show that the artificial rise in volumes and fall in price occurred in SMR scrip due to his concentrated trading. b. He squared up his outstanding positions in SMR scrip for the day since he was jobbing. c. His alleged relation with PIPL as a client and creation of volume due to his trading are baseless. d. He placed orders from Ahmedabad when he was on his way to his native place in Rajasthan and pilgrimage to Nathdawara. e. SCN is vague and does not clearly specify the manner in which violation has been committed. f. He had not acted in concert with other brokers. g. He had no intention to increase the volume and fall in prices of SMR.
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Source: SecMarx — sebi:WTM/PS/15/IVD/ID-8/NOV/09. 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.