sebi:WTM/SR/SEBI/EFD-DRA1/69/09/2017

SEBI · SEBI · 2010-02-05 · S. Raman, 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

All 19 Noticees held to have violated PFUTP Regulations read with SEBI Act; disgorgement of Rs.54,73,685 held not necessary at this juncture in view of prior adjudication penalty of Rs.2.50 crores jointly and severally.

Provisions invoked

• s. 11(4)
• s. 12A
• s. 12

Regulations

• Reg. 3
• Reg. 199
• Reg. 3(a)
• Reg. 3(c)
• Reg. 20(4)(c)

Holding

All the Noticees violated regulation 3(a), 3(c), 4(1), 4(2)(a), (b) and (e) of the PFUTP Regulations read with section 12A(a) and (c) of the SEBI Act, 1992. Disgorgement of Rs.54,73,685 being the illegal profit was held not necessary at this juncture in view of the prior penalty of Rs.2.50 crores imposed jointly and severally.

Full text

Page 2 of 30 from March 18, 2008 to October 1, 2009 (“investigation period”) and the following were observed: i. Share price of the company had increased from Rs.392/- on March 18, 2008 to Rs.3,464/- on August 27, 2009. ii. The company announced a share split in the ratio of 1:10 on August 28, 2009 and the share price again increased from Rs.363.75 on August 31, 2009 to Rs.816/- on September 30, 2009. iii. The closing price of the shares of the company as on October 1, 2009 was Rs.778.10. iv. Certain entities related to the promoters of the company traded in the shares of SJCL allegedly through structured and pre-planned trades with an intention of rigging up the share price prior to the stock split. v. Concurrently, SJCL made certain corporate announcements, prima facie with an objective of generating interest in the scrip. vi. Subsequent to the price increase, the promoter-related entities offloaded the shares in the post-split period (i.e., after August 28, 2009).

Page 3 of 30 Rasila Patel, (16) Ms. Pragna Patel, (17) Ms. Geeta Patel, (18) Mr. Shantibhai M Chanchpara and (19) Ms. Madhuben M Chanchpara (Collectively referred to as 'Noticees' and individually by their respective names) calling upon the Noticees to show cause as to why suitable directions under section 11(4) read with sections 11(1) and 11B of the SEBI Act, 1992 should not be issued against them for the alleged violations of the provisions of regulation 3(a), 3(c), 4(1), 4(2)(a), (b) and (e) of the SEBI (PFUTP) Regulations read with section 12A (a), and (c) of the SEBI Act, 1992.

Page 4 of 30 ii. The entire Notice is hinging on the assumption (which is totally without basis) that the persons/ entities who had traded in the scrip of the Company, had traded at my behest and or on my instructions so as to manipulate the open offer. Allegations in the Notice are premised on the theory of guilt by association. It is specifically and categorically denied that I had any role in the trading done by persons/entities referred to in the Notice. Even there is nothing in the Notice to demonstrate that I had any role to play in the trading done by persons/ entities referred to in the Notice. Only basis of the inference being relationship with certain persons. Admittedly, I have not carried out even a single trade during the entire investigation period. Simply because some of the persons who are related to me, who had independently traded, in the shares of the Company without my involvement cannot lead to automatic inference that said persons/entities traded at my behest or on my instructions. It is submitted that based on alleged tenuous connections serious

Source: SecMarx — sebi:WTM/SR/SEBI/EFD-DRA1/69/09/2017. 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.