sebi:WTM/PS/JAN/IVD/ID-4/57/2012
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Facts / Headnote
Interim directions revoked and SCN disposed of without any further direction; debarment already undergone treated as proportionate penalty.
Provisions invoked
- s. 19
Regulations
- Reg. 11
- Reg. 3(a)
Parties
- VSB Investments Pvt. Ltd.
Holding
The noticee's trades in the scrips of Cals and Confidence contributed to the creation of artificial volume in violation of Regulation 3(a) and 4(2)(a) of the PFUTP Regulations, but the debarment already undergone (over two years and seven months) was found proportionate to the violations, so the interim directions were revoked and the SCN disposed of without further direction.
Full text
Page 2 of 7 obligations of one connected client were fulfilled by the off-market borrowing of the shares from another connected client, and thereafter the borrower was seen to have bought back the shares from the market and returned the same to the lender through off-market transfer.
Page 3 of 7 6. The SCN alleged that the noticee had executed synchronized transactions with connected clients, which resulted in the creation of artificial volumes in the scrips of Confidence and Cals. The acts of the noticee were thus alleged to be in violation of Regulation 3(a), 4(2) (a) and (g) of the PFUTP Regulations. Accordingly, the SCN called upon the noticee to show cause as to why directions in terms of Sections 11, 11(4) and 11B of the SEBI Act, including debarring it from accessing the securities market and prohibiting it from buying, selling or otherwise dealing in securities for an appropriate period of time, should not be issued against it.
Page 4 of 7 f. In January 2008, after a market crash, VSB had a margin shortfall in respect of its trading account with its broker, ILFS Investsmart Financial Services Ltd. In view of this, VSB requested Kundan Leasing and Finvest P. Ltd. (Kundan) to lend 30 lakh shares of Confidence, and it was in this background that VSB received the shares by way of an off market transfer. Further, the shares were transferred to the margin account of ILFS Investsmart Financial Services Ltd. g. However, since the value of its stocks kept eroding due to the continuous market fall, the shares lying in the account of ILFS Investsmart Financial Services Ltd. were sold from February 8, 2008 onwards.
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Source: SecMarx — sebi:WTM/PS/JAN/IVD/ID-4/57/2012. 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.