sebi:WTMN/197/IVD/8/04

SEBI · SEBI · 2001-05-04 · T M Nagarajan, 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

Ms. Aditi Dalal directed to disassociate herself from the securities market and not to deal in securities for a period of six months with immediate effect

Provisions invoked

• s. 11
• s. 19

Regulations

• Reg. 4
• Reg. 11
• Reg. 4(b)

Parties

• Ms. Aditi Dalal

Holding

Ms. Aditi Dalal violated Regulation 4(a), (c) and (d) of the FUTP Regulations, 1995 by executing matched, non-genuine transactions for 1100 shares of Ravalgaon Sugar Farm Ltd. with Ms. Ashadevi Beriwala and was restrained from dealing in securities for six months.

Full text

Page 2 of 13 1.3 The total traded quantity on BSE for the period of investigation was 6386 shares. The price of the scrip at BSE opened at Rs. 3650 on May 04, 2001 and touched a high of Rs. 5564.15 and a low of Rs. 3180 on May 15, 2001 and closed at Rs. 3975 on June 29, 2001. High volumes of 1012 shares and 1001 shares were observed on May 8, 2001 and May 21, 2001 respectively. 2.0 INVESTIGATION 2.1 Observing large volumes in the scrip during the above mentioned period, investigation was conducted and the brokers and the clients were called for ascertaining the reason of trading in comparatively large quantities. 2.2 The trades in the scrip were investigated for the period May 04, 2001 to June 29, 2001. On National Stock Exchange comparatively large trading volumes were observed on June 11, 2001 and June 15, 2001 and a sharp rise in the closing prices of the scrip from Rs. 3220.00 on May 22, 2001 to Rs. 5555.30 on June 04, 2001. It was observed that two brokers viz., CFL Securities Ltd. and DGP Securities Ltd. matched their orders by placing buy and sell orders with little time gap. 2.3 The total traded quantity on NSE for the period of investigation was 1978 shares. The price of the scrip on NSE rose from Rs. 3220/- on May 23, 2001 to Rs. 4565/- on June 19, 2001, with a high of Rs. 5550/- on June 04, 2001 and a low of Rs. 3477/- on May 23, 2001. On June 11, 2001 and June 15, 2001 the volume in the scrip was 314 shares and 1240 shares respectively. 2.4 Ms. Aditi Dalal traded

Page 3 of 13 2.5 It was found during the course of investigation that Ms. Ashadevi Beriwala is mother of the CEO of the broker, Mr. Mukund Beriwala. The orders for the above trades were matched with those of the broker CFL Securities Ltd. of which the client was one Ms. Aditi A Dalal. The above trades were executed by Ms. Ashadevi Beriwala in concert with Ms. Aditi A Dalal who was a client of the broker CFL Securities Ltd. In total they executed 5 structured deals for above trades including 1100 shares as given below: 2.6 It was observed that Ms. Aditi Dalal matched the trades by placing the orders for these trades at the same price and at approximately the same time. In the above trades CFL Securities Ltd. had been on the buy side and DGP Securities Ltd. had been on the sell side. All the deals had been executed by Ms. Aditi Dalal through her broker, CFL Securities Ltd. on the SN Date No. of shares sold % of Net bought shares to Mkt. Net 2001023 June 11, 2001 310 (81.58) 2001024 June 15, 2001 790 (97.77) SN Date of trading No. of Trades Avg trd. Price (Rs.) Trd Qty (shares) % to Mkt Gross for The SN 2001023 June 11, 2001 1 4825 310 35.23 2001024 June 15, 2001 4 4712 790 30.83 Total 5 1100

Page 4 of 13 buy side and Ms. Ashadevi Beriwala as a client to the broker DGP Securities Ltd. on the sell side. 2.7 The shares sold by Ms. Ashadevi Beriwala were delivered in the market from the demat account of Ms. Aditi Dalal, instead of Ms. Ashadevi Beriwala’s demat A/c. The broker CFL Securities Ltd. has been a net buyer and the broker DGP Securities Ltd. has been a net seller in the scrip during the period under investigation. 2.8 On analyzing the demat statements of both the above brokers, it was observed that all the shares sold on behalf of the client – Ashadevi Beriwala, were being transferred to the broker’s pool account from the beneficiary account of Aditi Dalal – A/c 10405081 – UTI Bank Ltd 2.9 It was further observed that Aditi Dalal is the wife of Mr. Asim B. Dalal who is one of the directors of the broker CFL Securities Ltd. 2.10 It was observed that the amount due to Ms. Ashadevi Beriwala for the above trades had been transferred to the account of Aditi Dalal who is the wife of the director of the broker CFL Securities Ltd. It was also found during the investigation that Ms. Ashadevi Beriwala undertook these transactions to finance the broker CFL Securities Ltd. and later she took the money back from the broker through above trades executed in the market. 2.11 Milan Dalal Director of CFL Securities Ltd. stated following as the reason for the above structured deals:

Source: SecMarx — sebi:WTMN/197/IVD/8/04. 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.