sebi:WTM/PS/16/IVD/ID-10/MAY/2012
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Facts / Headnote
Certificate of registration of ESS ESS Intermediaries Private Limited suspended for a period of two months; found guilty of violation of PFUTP Regulations and Code of Conduct for stock brokers
Provisions invoked
- s. 11B
- s. 19
Regulations
- Reg. 7
- Reg. 5(1)
- Reg. 4(1)
- Reg. 28(2)
- Reg. 28(1)
- Reg. 38
- Reg. 38(2)
Parties
- ESS ESS Intermediaries Private Limited
Holding
The noticee ESS ESS Intermediaries Private Limited was held guilty of indulging in synchronized reversal of trades that created artificial volumes and rigged the price of the Adani scrip, violating Regulations 4(1), 4(2)(a), (b), (e) and (g) of the PFUTP Regulations and the Code of Conduct for stock brokers. Its certificate of registration was suspended for two months.
Full text
Page 2 of 13 period of investigation was 38,91,856 shares and out of this 2,96,943 shares, i.e., 7.63% was in the nature of structured trades.
Page 3 of 13 the PFUTP Regulations and Clauses A(1), (3), (4) and (5) of the Code of Conduct for stock brokers under Schedule II of Regulation 7 of the Broker Regulations.
Page 4 of 13 submissions filed and the material available on record. The submissions of the noticee in brief are: - The noticee was holding the shares of Adani since long. Against this holding, the jobbing was regularly undertaken by Mr. Samir P. Shah, its whole time director. Samir P. Shah had also traded in in a similar manner in other scrips as well. The trades executed by the noticee were in the nature of jobbing backed by delivery. - Adani was never an illiquid scrip as the average trading volume of 30,000 to 50,000 shares was taking place even during the lean period in the scrip. - No trading has been undertaken through it on December 18, 2003, December 19, 2003 and December 22, 2003 i.e., during the period of substantial rise in price in the scrip of Adani. As per the BSE data, there was no sharp rise in the volumes during the period of November 27, 2003 to December 17, 2003 i.e., 31,810 shares to 51,592 shares. - The trades were not self deals. Ess Ess has not traded in the scrip through Naman but merely settled the trade on behalf of Nitin Patel who is a client of Ess Ess without charging any brokerage from Nitin Patel. An affidavit of Nitin Patel in support of this claim has been filed by the noticee. Ess Ess merely settled the trades, i.e., post facto the dealing and execution of trade with Naman by Nitin Patel. SEBI has not initiated any action against Nitin Patel. - The trades in question pertains to the year 2003 i.e. about 8 years back. - The period of investig
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Source: SecMarx — sebi:WTM/PS/16/IVD/ID-10/MAY/2012. 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.