sebi:WTM/PS/26/IVD/ID-1/JULY/2010
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Facts / Headnote
Restrained the noticee from buying, selling or dealing in securities market or accessing the securities market, directly or indirectly, for a period of three years from the date of the order.
Provisions invoked
- s. 11
Regulations
- Reg. 11
- Reg. 4(a)
- Reg. 4(1)
Parties
- Mr. Shirish Shah
Holding
The charge of violation of Regulation 4(a), (b), (c) and (d) of PFUTP Regulation (as applicable at the time) read with Regulation 4(1), 4(2)(a), (b), (e) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practice relating to Securities Market) Regulations, 2003 was established against the noticee, Mr. Shirish Shah, who was restrained from accessing the securities market for three years.
Full text
Page 2 of 11 3. The investigation prima facie revealed that circular trading by two groups of brokers and clients contributed to an unusual spurt in the traded volumes of the scrip. Out of these two groups, the group consisting of four brokers namely DPS Shares and Securities Pvt. Ltd., Unique Stockbro Pvt. Ltd., Networth Broking Ltd. and Action Financial Services (I) Ltd. and their clients were found trading intra-day for 40 days in circular manner during the relevant period in the scrip. The total volume generated by way of such circular trades was 4,28,749 shares about 19% of the total quantity traded during the period under investigation. Its contribution was between 13 and 34% of day-wise volumes. The price of the scrip increased from Rs.23.60 to Rs.98.25 during the period of circular trading i.e. August 1, 2002 to September 30, 2002. Inter alia it was revealed that Ms. Trusha Goda, client of Unique Stockbro Pvt. Ltd. and Ms. Indumati Goda, client of Networth Broking Ltd. prima facie related/ connected to each other, had created artificial volumes in the scrip of GGAGL, by trading in circular manner.
Page 3 of 11 Securities Market) Regulation, 2003. The SCN alleged that the noticee while trading for Ms. Trusha Goda and Ms. Indumati Goda was observed to be a part of a group of clients/ brokers involved in the circular trading and had actively traded in the shares of GGAGL during the relevant period among themselves, created artificial volumes and thereby contributed to the price rise in the scrip of GGAGL. The SCN, therefore, alleged that the acts of the noticee were in violation of Regulations 4(a), (b), (c) and (d) of PFUTP Regulations as applicable at the relevant period. Accordingly, it called upon the noticee to show cause as to why action under Section 11, 11B and 11(4) of SEBI Act, including restraining him from accessing the capital market and prohibiting from buying, selling or dealing in the securities in any manner whatsoever for a particular period should not be initiated against him.
Page 4 of 11 b. Had not operated the accounts of Goda family with the brokers/ banks/ depository participants. c. Transactions in the shares of GGAGL had been executed under the instructions and on behalf of Goda family. Had not dealt in the shares of GGAGL either in my personal capacity or on behalf of any other person. d. Denied of dealing directly/ indirectly in the shares of GGAGL. e. Noticee and Ajay Goda had decided to make application in the public issues in the name of the family members of Ajay Goda and profits made thereof be shared. In accordance with the verbal agreement between the noticee and Ajay Goda, various documents of Goda family for opening bank account and demat account were handed over to noticee. f. In the year 2001, Ajay Goda approached noticee and asked for documents relating to bank and demat account for undertaking certain transactions. Accordingly all documents were handed over to Ajay Goda by the noticee. g. Noticee and Ajay Goda thereafter had decided to do jobbing transactions in the name of Goda family. However profits made out of this were not enough. In August 2002, Ajay Goda insisted that he would like to do jobbing transactions himself and would not like to share profits with the noticee. Ajay Goda wanted noticee to operate all his family members’ accounts and do the jobbing transactions as per his instructions and for this service he agreed to pay the noticee certain percentage of jobbing profit. Since, August, 2002, all transactions were
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Source: SecMarx — sebi:WTM/PS/26/IVD/ID-1/JULY/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.