sebi:WTM/SR/SEBI/EFD-DRA4/24/03/2016

SEBI · SEBI · 2013-04-12 · 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

Prohibited from taking up any fresh assignments for a period of fifteen (15) days

Provisions invoked

• s. 19

Regulations

• Reg. 15
• Reg. 28(2)
• Reg. 28(1)

Parties

• Ishita Consultancy Private Limited

Holding

The Noticee, Ishita Consultancy Private Limited, violated Clauses A(1), D(4) and D(5) of the Code of Conduct specified in Schedule II of Regulation 15 of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 by executing self trades in its own account in the scrip of Riba Textiles Ltd. The Noticee was prohibited from taking up any fresh assignments for a period of fifteen (15) days.

Full text

Page 2 of 11 3. Ishita Consultancy Private Limited (“Ishita Consultancy”) is a SEBI registered Sub Brokerhaving Registration Number INS013262238 and affiliated to Stock Broker,ASE Capital Markets Limited. It was observed that during the investigation period, Ishita Consultancy had executed self trades on its own account in the scrip of RTL for 34,596 shares which is 23.38 % of Ishita’s total traded quantity in the scrip of RTL. In view of the same, it was alleged that Ishita Consultancy contravened Clauses A(1), D(4) and D(5) of the Code of Conduct specified in Schedule II of Regulation 15 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 (“Brokers Regulations”).

Page 3 of 11 learned Designated Authority has overlooked various provisions of law as well as facts and more particularly the fact that Investigating Officer has not found our role as sub broker guilty or violative of synchronized trade as part of group entities… The Designated Authority has not found the alleged trades attracting unsuspecting investors as has been observed by the Investigating Authority as well as false and misleading appearance on account of alleged self trades as has been alleged in Show Cause Notice and therefore has not only misread various provisions of the Rules, Regulations and relevant laws but has also ignored the substantial evidence like Demat Statement establishing the change of beneficial ownership in case of all alleged self trades as also BSE Order Matching Rules while finding to not have appropriate system to ensure prevention of unfair trade practices while imposing a penalty as imposed in the report placed by the learned Designated Authority. iii. The company Ishita Consultancy Pvt. Ltd. has largely undertaken investment / trading in the scrip Riba Textiles Ltd. We have traded for 2,20,257 buy shares consisting of 200 trades and 2,20,257 sell shares consisting of 161 trades aggregating 4,40,514 shares consisting of 361 trades in the scrip since December 2008 till December 2009 i.e. for almost 12 months. The statement substantiating the said trading is annexed herewith as an Enclosure C to this submission, for your necessary perusal and kind

Page 4 of 11 quantum of 34,596shares with corresponding 11 trades are considerably very low and virtually insignificant compared to our total trading during the period of investigation. vii. On further reading of the data contained in BSE Bhav Copy and more particularly in the column “% Deli. Qty to Traded Qty”, it can be seen that “100” is found suggesting that the entire trading in the scrip was delivery based and every trade including the impugned alleged trades were delivery based trading reflected in the demat statement of the company. viii. The company is operating its sub-broker activity through Ahmedabad Capital Market Ltd (ACML) member of BSE. The company has substantially traded in many other scrips in addition to the trading in the scrip of Riba Textiles Ltd; during the period of investigation including the trading on alleged days i.e. 19th 23rd and 24th March, 2009. ix. The company was not getting requisite quantity of shares against its purchase order and the purchase orders which were found to have been executed were in very small quantity corresponding to one order for large quantity. Due to such prevailed position, the buy position in pending order book was demonstrating quantity in increasing manner. Against that, attempts were made to cancel the pending buy orders. However, to cancel the order, it consumes little more time in imputing the order in the system and the technical difficulty being faced was that while imputing such orders, if any matching occurre

Source: SecMarx — sebi:WTM/SR/SEBI/EFD-DRA4/24/03/2016. 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.