sebi:WTM/SKM/EFD1-DRA-II/28/2019-20

SEBI · SEBI · S K Mohanty, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Noticee restrained from accessing the Securities Market and prohibited from buying, selling or otherwise dealing in securities for a period of one year; existing holdings frozen.

Provisions invoked

• s. 19

Regulations

• Reg. 3

Parties

• Mr. Dineshkumar Chimanlal Darji

Holding

The Noticee's trades in the scrip of MKE were held to be in violation of Regulations 3(a), (b), (c), (d) and 4(1), 4(2)(a), (e) of the SEBI (PFUTP) Regulations, 2003, and he was restrained from accessing the securities market for one year.

Full text

Order in respect of Mr. Dineshkumar Chimanlal Darji in the matter of M/s. Matra Kaushal Enterprise Ltd. Page 2 of 9 2. On analyzing all negative LTP trades of the Noticee during this period, it was observed that the Noticee traded with 26 counter parties, while contributing to a cumulative negative LTP of Rs. 169 through 71 trades in 14 trading days. It was observed that out of 71 trades, 34 sell orders were placed for only 1 share each when the respective buy order quantity was in the range of 2-5000 shares with a total of 18776 shares already available for buy in the system. It is seen that these 34 sell orders themselves have contributed to a cumulative negative LTP of Rs. 121.20. The sell orders were placed after the buy orders. By executing these trades, the Noticee matched the prices of prevailing buy orders which were placed at a lower price than the last traded price and thus contributed to the fall in the scrip price with each of his trades. The details of the 34 trades executed by the Noticee during the aforesaid period, as have been culled out from the trade & order logs for the relevant period are as under:

Order in respect of Mr. Dineshkumar Chimanlal Darji in the matter of M/s. Matra Kaushal Enterprise Ltd. Page 3 of 9 08/12/2014 19 42.05 -3.7 201 1 14:21:47 14:22:16 08/12/2014 22 42.05 -2.7 200 1 14:23:00 14:34:01 08/12/2014 28 42.15 -2.8 200 1 14:34:52 14:39:49 08/12/2014 31 42.15 -2.85 123 1 14:39:57 14:43:11 09/12/2014 1 38 -7.75 400 1 09:26:41 09:26:54 09/12/2014 3 43.1 -4.3 200 1 12:36:35 14:12:05 09/12/2014 14 43.15 -4.15 2 1 14:12:39 15:08:09 10/12/2014 59 45.2 -6.55 200 1 15:07:08 15:19:41 10/12/2014 62 46 -5.75 200 1 15:20:55 15:21:39 10/12/2014 68 46.6 -5.25 4000 1 15:24:40 15:27:17 17/12/2014 82 42.1 -2 800 1 15:22:19 15:23:02 18/12/2014 9 43.1 -5.45 1000 1 13:53:56 13:54:10 18/12/2014 15 45.1 -3.5 600 1 13:54:49 13:54:49 18/12/2014 17 45.1 -3.5 600 1 13:55:21 13:55:38 18/12/2014 21 45.25 -0.75 1000 1 14:16:37 14:16:41 18/12/2014 24 45.25 -2.85 499 1 14:17:50 14:19:14 18/12/2014 26 45.25 -2.9 499 1 14:17:50 14:20:43 18/12/2014 29 46.05 -1.95 95 1 14:23:20 14:52:33 18/12/2014 34 46.05 -2.2 95 1 14:23:20 14:59:56 19/12/2014 13 43.1 -5.2 900 1 12:17:31 12:17:37 19/12/2014 18 43.1 -5.2 900 1 12:17:31 12:17:47 19/12/2014 21 46 -1 100 1 12:18:12 12:20:37 19/12/2014 25 47.1 -0.9 900 1 12:23:13 12:23:16 TOTAL

Order in respect of Mr. Dineshkumar Chimanlal Darji in the matter of M/s. Matra Kaushal Enterprise Ltd. Page 4 of 9 3. Thus, based on above trading pattern, it was alleged that the Noticee was not acting as a genuine seller and had no bona fide intention to trade in securities because, in-spite of sufficient buy orders with abundant quantity of shares being available in the market, the Noticee placed sell orders for minuscule quantity of only 1 share in each of his transactions in most of his trades. The Noticee has also executed multiple transactions of such miniscule quantities of shares in a single day. By executing these trades, the Noticee was alleged to be instrumental in establishing a price lower than the LTP and has contributed to the fall in the price of the scrip of MKE. The Noticee was therefore alleged to have manipulated the scrip price of MKE and created a misleading appearance of trading in the scrip in breach of provisions of Regulation 3 (a), (b), (c), (d) and 4(1) and 4 (2) (a) & (e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations").

Source: SecMarx — sebi:WTM/SKM/EFD1-DRA-II/28/2019-20. 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.