sebi:WTM/SM/IVD/ID2/26026/2023-24

SEBI · SEBI · 2021-12-17 · 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

Charges of spoofing of order book proved; disgorgement of unlawful gains of INR 52.55 Lakh directed; penalties imposed under Section 15HA of SEBI Act, 1992; debarment/restriction directions issued.

Provisions invoked

• s. 15
• s. 19
• s. 12A
• s. 12
• s. 15H
• s. 15G
• s. 11(5)

Regulations

• Reg. 4
• Reg. 3
• Reg. 2
• Reg. 3(a)

Parties

• Nimi Enterprises (Noticee no. 1)
• Mr. Dilip Talakshi Vora (Noticee no. 2)
• Ms. Nishi Vora (Noticee no. 3)
• Mr. Rohit Bhawanji Chheda (Noticee no. 4)

Holding

The Noticees were found to have violated Section 12A(a), (b), (c) of the SEBI Act, 1992 and Regulations 3(a)-(d) and 4(1), 4(2)(a), (g) of the PFUTP Regulations, 2003 by repeatedly spoofing the order book across 58 scrip days in 16 scrips, making unlawful gains of INR 52.55 Lakh. Penalties were imposed under Section 15HA: INR 10 Lakh on Noticee no. 1, INR 5 Lakh each on Noticees nos. 2, 3 and 4.

Full text

Order in the matter of trading activities of Nimi Enterprises Page 2 of 40 ii. Noticee no. 1 was having a trading account with Edelweiss Stock Broking Limited through Noticee no. 3 acting as Authorised Person (hereinafter referred as “AP”) of the said stock broker. iii. During the investigation period, the Noticee no. 1 has traded in 16 different scrips on 58 scrip days. iv. The examination of the trading activities of the Noticee no. 1 revealed an identifiable pattern wherein, it first used to place a large order in a particular scrip on one side (buy or sell) at a price having substantial difference from the existing market price/last trade price; thereafter, another contra order was placed by the Noticee no. 1 in the same scrip containing a lesser number of shares (as compared to the earlier order) at a price near to market prices and subsequent to the execution of the second order containing smaller quantities, the previously placed order containing a large number of shares was cancelled. In most of the orders, the quantities of the orders were fully disclosed to the market. v. The aforesaid peculiar pattern of trading has been followed by the Noticee no. 1 on 58 scrip days spread over 16 different scrips. vi. More than 95% of such trades of the Noticee no. 1 were executed through Edelweiss Broking Limited, wherein the Noticee no. 2 (partner of the Noticee no.1 and the person authorised to place orders on its behalf) had placed such orders in offline mode. Most of such or

Order in the matter of trading activities of Nimi Enterprises Page 3 of 40 the market price which were cancelled eventually. The orders containing small quantities were executed while the large orders were pending in the system. ii. By such a practice, the buy orders were spoofed by 4,22,47,023 quantities and sell orders by 3,12,49,377 quantities in 16 scrips over a period of 58 scrip days, which were in the range of 1% to 250% of the traded volume for the respective scrip on the relevant day (s). Further, in 26 scrip days out of 58 scrip days, the volume traded on the spoofing days increased by 6%-2880% from the previous day’s volume. iii. The spoofed orders were placed away from the existing market price and the variation from the market price was in the range of 6% to 28%. iv. The spoofed orders were disclosed fully to the market and thereby created artificial demand (in case of buy orders) or artificial supply (in case of sell orders) as the said orders were never intended to be executed and subsequently got cancelled. v. The order book was spoofed by 1% to 250% of the traded volume of the respective scrip by the said spoofing orders. Further, out of 58 scrip days, the Noticee no. 1 has sold 90% of the days’ total quantity during the spoofing period only. vi. By executing trades in such a manner, the Noticee no. 1 was able to make unlawful profits of INR 52.55 Lakh. vii. The Noticee no. 2 was the person authorised to place orders/trade on behalf of the Noticee no. 1. The

Order in the matter of trading activities of Nimi Enterprises Page 4 of 40 requested for a personal hearing in the matter which was scheduled on October 11, 2022. On the said date, the common Authorised Representative for the Noticee nos. 1, 2 and 3 appeared and presented his oral submissions, which was followed up by a written submission dated November 17, 2022.

Source: SecMarx — sebi:WTM/SM/IVD/ID2/26026/2023-24. 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.