TaxTMI 
TaxTMI 
2022 (11) TMI 1576
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....eriod'). It was also observed that certain entities had contributed significantly to the positive LTP in the scrip during the aforesaid period. In view of the preliminary observations, an investigation was carried out by SEBI into the trading in the scrip during the investigation period. Based on the findings of the investigation, a show cause notice dated September 2, 2021 (hereinafter referred to as "the SCN"), was issued by SEBI to PFL Infotech Ltd, Pulla Amresh Kumar, Abhinandan Jain, Nickunj Shah, Ashroj Credit India Private Ltd., Mahesh Meetal HUF, Fair Intermediate Investment Private Ltd., Rahul Gupta and Parvinder Singh (hereinafter referred to as "the Noticees") alleging therein violations of the SEBI (Prevention of Fraudulent and unfair trading activities relating to the Securities Market) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations, 2003"), by the Noticees. In addition, certain violations of the SEBI (Stock Broker) Regulations, 1992 (hereinafter referred to as the "Broker Regulations") were also alleged against Fair Intermediate Investment Private Ltd. (Noticee no.7). Further, it was also alleged that certain disclosure related provisions of SEBI....
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.... 13 to May 19, 2014, Noticee Nos. 5 and 6, have indulged in manipulative and fraudulent trades that have contributed to price rise in the scrip of PFL. (vi) During the entire investigation period i.e., July 01, 2013, till March 01, 2016, Nickunj Shah and Pulla Amresh Kumar have not bought any share of PFL. All the trades were pertaining to selling of the shares of PFL. (vii) In view of the above sequence of events i.e., transfer of warrants, conversion into shares, lock-in period, date of dematerialization and sale of shares during the period in which price of the scrip was manipulated by entities linked with PFL, through Mr. Abhinandan Jain, Director of PFL, it is alleged that the company PFL, Abhinandan Jain, Pulla Amresh Kumar and Nickunj Shah were part of the scheme to manipulate the price of the scrip. (viii) In addition to the above, Noticee no.2 is alleged to have failed to make requisite disclosures under PIT Regulations, 1992 and SAST Regulations, 2011. Noticee no.1 is alleged to have not made disclosure regarding appointment of its CFO, in violation of Regulation 30 of LODR Regulations. (ix) Noticee nos. 7 and 8, who were not found to b....
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.... (ii) Whether Noticee nos. 5 and 6 (Ashroj Credit India Private Ltd. and Mahesh Meetal HUF, respectively) were connected to PFL (Noticee no.1) and Pulla Amresh Kumar (Noticee no.2) through Abhinandan Jain (Noticee no.3)? (iii) Whether Noticee nos. 5 and 6 (Ashroj Credit India Private Ltd. and Mahesh Meetal HUF respectively) engaged themselves in LTP manipulation of the scrip of PFL and thereby violated the PFUTP Regulations, 2003? (iv) Whether Pullla Amresh Kumar (Noticee no.2) and the deceased Noticee no.4 benefitted from the LTP manipulation of Noticee nos.5 and 6 (Ashroj Credit India Private Ltd. and Mahesh Meetal HUF respectively)? (v) Whether Noticee no.7 (Fair Intermediate Investment Private Ltd.) being the broker of Noticee nos.5 and 6 (Ashroj Credit India Private Ltd. and Mahesh Meetal HUF respectively) facilitated the aforesaid LTP manipulation? (vi) Whether Abhinandan Jain (Noticee no.3) acted as an intermediary between Noticee nos. 5 and 6 (Ashroj Credit India Private Ltd. and Mahesh Meetal HUF respectively) and Noticee no.2 (Pullla Amresh Kumar), so as to facilitate the profitable offloading of shares in the market and whether the....
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....le regulations. As noted above, an opportunity of personal hearing was granted to all the Noticees on August 23, 2022. All relevant documents were provided to the Noticees as annexures to the SCN including price volume data for the investigation period, order log and trade log for the investigation period, documents that showed the alleged connections, bank statement of Abhinandan Jain, replies of Abhinandan Jain, Nickunj Shah and Fair Intermediate Pvt. Ltd. as well documents regarding the disclosure violations alleged. The investigation report was also provided to the Noticees. I also note that the Noticees have filed detailed submissions, and have not specified what prejudice has been caused to them. Investigation involved obtaining information from various sources and analysis of information received. I also note that there is no provision in the SEBI Act, 1992 which may have the effect of prohibiting SEBI from taking action beyond a particular period of time in a given case. In Ravi Mohan & Ors. v. SEBI decided on August 08, 2013, Hon'ble Securities Appellate Tribunal, Mumbai (hereinafter referred to as 'Hon'ble SAT') while referring to its own decision in HB St....
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....e proceedings cannot be quashed simply on the ground of delay in launching the same. Further, as explained by the learned counsel for the respondent as recorded in paragraph No. 6.4 above, large numbers of entities and transactions were analyzed by SEBI which took some time." 8. I also note that the SEBI Act, 1992 and the regulations framed thereunder have got a larger public purpose in the form of investor protection and the regulation and development of the securities market. These purposes would stand defeated if the manipulators are allowed to go scot-free just because of delay in initiating action against them. In view of the above facts, I find that no prejudice has been caused upon the Noticees nor have they been able to make out a case of prejudice due to the alleged delay in initiation of proceedings. Hence, the contention of the Noticees that the present proceedings are liable to be closed/ dropped on account of delay, cannot be accepted. B. Miscellaneous Preliminary Submissions: 9. The Noticees have also submitted that the SCN is vague as it does not disclose the kind of measures SEBI is contemplating to take. In the instant proceedings, the SCN has been issued ....
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.... of course, has to be on the basis of proof beyond reasonable doubt ... " In view of the above, I note that a test of preponderance of probabilities applies to allegations of violation of PFUTP Regulations, 2003, with respect to dealings in the securities market. C. Connections between Noticee nos. 1-7 11. From the SCN, I note that Mahesh Meetal (Karta of Mahesh Meetal HUF-Noticee no.6) and Sandeep Mittal (director of Ashroj Credit India Pvt. Ltd .- Noticee no.5) were co-directors in Fair Developers Pvt. Ltd. and Saakshi Shares Pvt. Ltd. Further, Mr. Mahesh Mittal (Karta of Mahesh Meetal HUF) and Ms. Meena Agarwal (wife of Mr. Sandeep Mittal), were 53.09% shareholders of Fair Intermediate Investment Pvt. Ltd. (Noticee no.7) during the Investigation Period. Noticee no. 5 and 6 have not denied these connections. Thus I find that Noticee nos.5,6 and 7 were connected to each other. 12. Mahesh Meetal (Karta of Mahesh Meetal HUF-Noticee no.6) and Sandeep Mittal (director of Ashroj Credit India Pvt. Ltd .- Noticee no.5) are also connected to the Independent Director of the Company (PFL) viz., Abhinandan Jain (Noticee no.3). The following fund transfers were observed in the ban....
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....re closely connected to the broker, Fair Intermediate Investment Pvt. Ltd. (Noticee No. 7), through whom they placed the aforementioned orders. Mahesh Meetal, Karta of Mahesh Meetal HUF, is a Designated Director of Noticee no.7. Further, Mr. Mahesh Mittal and Ms. Meena Agarwal, wife of Mr. Sandeep Mittal, were 53.09% shareholders of Fair Intermediate Investment Pvt. Ltd. during the investigation period, i.e., they held a controlling stake in the broker. 16. In view of the above, I find that Noticee nos. 1-7 are connected. D. LTP Manipulation by Noticee nos.5 and 6 17. The SCN notes that the scrip of PFL, which was listed on BSE, was trading in the Periodic Call Auction Session (PCAS) for the period July 09, 2013, to January 12, 2014. Hence, the scrip was illiquid. The scrip opened at Rs. 44.20, touched a high of Rs. 825, low of Rs. 15.00 and closed at Rs. 15.00 during the investigation period (i.e. July 01, 2013 to April 13, 2016). The price of the scrip rose steadily till May 19, 2014, and suddenly fell thereafter. The investigation period was divided into 5 patches, and the details of the same, in brief, are as under: Table No.3 Period Dates Opening....
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....tigation period. 19. Ashroj Credit India Private Ltd (Noticee no.5) and Mahesh Meetal HUF (Noticee no.6) during the hearing and in their replies have, inter alia, made the following submissions in respect of the allegations made out in the SCN against them: (i) The SCN is general and vague in nature. It has not been brought out as to how they had manipulated the price without synchronised/ circular trades with counter party. No relation with any counterparty has been brought out (ii) The trades have resulted in actual delivery/ fund payment, as the case may be. The trades were executed in a bonafide manner. The trading was not a result of any collusion with any other party. (iii) They had traded only on a few days in the investigation period and the SCN is based on the miniscule trading by them. Only few trades had contributed to positive LTP. All other buy trades were done at the same or lower price than LTP. Prices were based on trading rationale and market sentiment. (iv) Price had risen in other patches also. (v) They had no reason to manipulate the price of the scrip. 20.I note that the Noticee nos. 5 and 6 have denied that th....
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....HUF 523 400 A b. The relevant extract of the Trade log for January 31, 2014 is given below: Table No.5 TRADE DATE CLIENT NAME ORDER_N O TRAD E ID ORDER TIME TRADE TIME ORDER LMTIME TRADE RATE LTP RAT E LTP_P ERCE NT ORDER RATE ORDER LMRA TE TRADE D_QTY 31/01/2014 SURENDRA SINGH BENGANI 17000122258180 1200 15:01:37. 008621 15:01:37. 066644 15:01:37. 008621 510 5 0.99 510 510 20 31/01/2014 SURENDRA SINGH BENGANI 17000122258850 1201 15:02:46. 101330 15:02:46. 191443 15:02:46. 101330 510 0 0 510 510 20 31/01/2014 RASHMI PANKAJ KESHARIYA 16000115199449 1202 15:03:10. 508111 15:03:10. 643561 15:03:10. 508111 510 0 0 510 510 2 31/01/2014 MAHESH MEETAL HUF 15000104136648 1203 15:04:47. 409684 15:04:47. 42715 15:04:47. 409684 510 0 0 523 523 18 31/01/2014 MAHESH MEETAL HUF 15000104136648 1204 15:04:47. 409684 15:04:47. 427155 15:04:47. 409684 510 0 0 523 523 20 31/01/2014 MAHESH MEETAL HUF 15000104136648 1205 15:04:47. 409684....
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....f the trade log, it was seen that order no 15000104136825 got converted to trade no 1214 and contributed Rs. 13 to market positive LTP and the traded quantity was 5 shares. ii. March 03, 2014 a. The relevant extract of the Order log for March 03, 2014 is given below: Table No.6 ORDER_TIME ORDER NO BUY SELL PANNO CLIENTNAME RATE QTY AUDC ODE Remarks, if any 11:37:22.964107 18000139059135 B ABFPB2869J SURENDRA SINGH BENGANI 521.04 100 U 11:47:25.285636 13000107238067 B AAXPG0444M NIRAV RAJABABU GANDHI 521.10 50 A 11:47:50.074273 14000137002827 B AZEPA0674P WASEEM AHMAD 521.15 75 U 11:48:37.587207 18000139059135 B ABFPB2869J SURENDRA SINGH BENGANI 521.15 100 U 11:49:03.759482 18000139059135 B ABFPB2869J SURENDRA SINGH BENGANI 521.15 300 U 11:49:13.353015 18000139058512 B ABFPB2869J SURENDRA SINGH BENGANI 521.15 50 U 11:51:52.114773 11000094103696 B AAXPG0444M NIRAV RAJABABU GANDHI 517.10 50 D 11:51:52....
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.... MAHESH MEETAL HUF 530.00 500 U b. The relevant extract of the trade log for March 03, 2014 is given below: Table No.7 TRADE DATE CLIENT NAME ORDER_N O TRAD E ID ORDER TIME TRADE_ TIME ORDER LMTIME TRADE RATE LTP_R ATE LTP P ERCE NT ORDER RATE ORDER LMRA TE TRAD ED_Q TY 28/02/2014 NILIMA N PATIL 170001393 35035 1163 15:14:31. 603669 15:14:31. 618251 15:14:31. 603669 534 0 0 534.25 534.25 55 28/02/2014 NILIMA N PATIL 170001393 35035 1164 15:14:31. 603669 15:14:31. 618253 15:14:31. 603669 534 0 0 534.25 534.25 55 28/02/2014 NILIMA N PATIL 170001393 35035 1165 15:14:31. 603669 15:14:31. 618496 15:14:31. 603669 534.25 0.25 0.05 534.25 534.25 25 03/03/2014 MAHESH MEETAL HUF 150001111 57562 1001 12:19:37. 500324 12:19:37. 51042 12:19:37. 500324 546.7 12.45 2.33 547 547 5 03/03/2014 MAHESH MEETAL HUF 150001111 57562 1002 12:19:37. 500324 12:19:37. 510681 12:19:37. 500324 547 0.3 0.05 547 547 1 03/03/2014 MAHESH MEETAL HU....
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.... LTP. The traded quantity was 5 and 1 shares. e. Order no 15000111157976 got converted into trade no. 1006 and contributed Rs. 2 to market positive LTP. f. Order no 15000111158345 converted into trade nos. 1008 & 1013 and contributed Rs. 4 to market positive LTP. g. I note that the other buy orders were in the range of Rs.521-525 approximately. The buy orders of Noticee no.6 were in the range of Rs. 13-16 more than LTP. This jump is considerably high, and any reasonable person, even if they desired to acquire shares and were willing to place a higher price, would not place a buy order at such a large variance at the very first instance. Noticee no.6 has also not offered any cogent reason for the placing of buy orders at such high rates. iii. March 18, 2014 a. The relevant extract of order log for March 18, 2014 is given below: Table No.8 ORDER_TIME ORDER NO BUYSELL CLIENTNAME RATE QTY AUDCODE Remarks, if any 11:14:06 AM 12000112031652 B ASHWANI KUMAR GUPTA 564 10 Added 11:15:10 AM 23000095044519 B SURENDRA SINGH BENGANI 564 135 Updated 11:16:58 AM....
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....4152175 B MAHESH MEETAL HUF 611 14 Added 11:25:53 AM 23000095088297 B SURESH SHYAMSUNDER KHETAN 560 5 Added 11:26:09 AM 23000095088495 S SURESH SHYAMSUNDER KHETAN 664.4 5 Added 11:26:22 AM 17000135015940 S ASHABEN DIPAKBHAI PATEL 629 50 Deleted 11:26:27 AM 15000109015498 S ASHABEN DIPAKBHAI PATEL 624.9 50 Added 11:26:36 AM 13000104152834 B MAHESH MEETAL HUF 609 10 Added 11:26:47 AM 18000131351950 S ASHABEN DIPAKBHAI PATEL 650.5 50 Added 11:26:50 AM 13000104153028 B MAHESH MEETAL HUF 608 29 Added 11:27:00 AM 18000131036238 S ASHABEN DIPAKBHAI PATEL 658 50 Deleted 11:27:03 AM 13000104153198 B MAHESH MEETAL HUF 607 21 Added 11:27:13 AM 13000104153303 B MAHESH MEETAL HUF 606 100 Added 11:27:27 AM 13000104153445 B MAHESH MEETAL HUF 605 59 Added 11:28:43 AM 14000135128028 S RAJA GIRDHARI FINANCE PROP.SOBHA CHHAJER ....
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....gh variance from LTP. I also note that other buy orders by entities other than Noticee no.6 were also generally placed at much lower rates. v. As noted above, Noticee no.6 was connected to Noticee no.3 (Abhinandan Jain), who was an Independent Director in PFL. Pulla Amresh Kumar (Noticee no.2) was the Chairman and Managing Director of PFL and possessed 11,50,000 convertible warrants, of which he had transferred 4,50,000 warrants to Nickunj Shah (Noticee no.4). Pulla Amresh Kumar (Noticee no.2) was introduced to Nickunj Shah (Noticee no.4) by Abhinandan Jain (Noticee no.3). Further, Pulla Amresh Kumar offloaded approximately 14,000 shares during the same period when Noticee no.6 executed trades that increased the price of the scrip of PFL. Hence, in my view, Noticee no.6 had fraudulently increased the price of the scrip of PFL to enable Noticee no.2 to offload shares at a higher price. Role of Ashroj Credit India Pvt. Ltd. (Noticee no.5) i. January 13, 2014 a. The relevant extract of the order log for January 13, 2014 is given below: Table No. 10 ORDER_TIME ORDER NO BUY SELL PANNO CLIENTNAME RATE QTY AUDC ODE Remarks, if an....
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....82.65 0 0 482.65 482.65 3 PRIVATE LIMITED 13/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 140001310 23306 1018 11:43:56. 513558 11:44:58. 320054 11:43:56. 513558 482.65 0 0 482.65 482.65 72 13/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 160001151 30050 1019 11:45:49. 289552 11:45:49. 31025 11:45:49. 289552 489.7 7.05 1.46 500 500 3 13/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 160001151 30050 1020 11:45:49. 289552 11:45:49. 310549 11:45:49. 289552 490 0.3 0.06 500 500 24 13/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 160001151 30050 1021 11:45:49. 289552 11:45:49. 310808 11:45:49. 289552 490 0 0 500 500 10 13/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 160001151 30050 1022 11:45:49. 289552 11:45:49. 311002 11:45:49. 289552 495 5 1.02 500 500 25 13/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 160001151 30050 1023 11:45:49. 289552 11:45:49.....
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.... PRADEEP KUMAR 495 3000 A 14:52:38.883284 14000121407143 S AEYPG2674Q RAJESH KUMAR GUPTA 495 1650 U 14:52:43.635073 14000121407718 S AACHA1811P ARUN AGARWAL 495 1800 U 14:52:52.680926 14000121407718 S AACHA1811P ARUN AGARWAL 495 1800 U 14:53:10.231675 14000121408835 S AACHP9363H PRADEEP KUMAR 496 3000 U 14:53:16.524898 14000121408835 S AACHP9363H PRADEEP KUMAR 495 3000 U 14:53:22.478659 14000121407718 S AACHA1811P ARUN AGARWAL 496 1800 U 14:53:27.539878 14000121407718 S AACHA1811P ARUN AGARWAL 495 1800 U 14:54:12.073460 14000121410000 S AABCA6849D ASHROJ CREDIT INDIA PRIVATE LIMITED 495 2350 A 14:56:48.003900 19000124320867 B AMGPB4068B NANJI ZINA BUKELIA 458.65 1100 A 14:57:05.352950 14000120570689 B ABFPB2869J SURENDRA SINGH BENGANI 459.00 50 A 14:57:24.461879 11000084061479 S AATPC6825E RAJA GIRDHARI FINANCE ....
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....0001214 12870 1033 14:58:14. 997954 14:58:15. 014481 14:58:14. 997954 482 1.35 0.28 490 490 10 14/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 140001214 12870 1034 14:58:14. 997954 14:58:15. 014774 14:58:14. 997954 485 3 0.62 490 490 100 14/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 140001214 12870 1036 14:58:14. 997954 14:58:15. 015517 14:58:14. 997954 490 5 1.03 490 490 15 c. On January 14, 2014, Ashroj Credit India Pvt Ltd. entered buy orders at Rs. 490 when the last traded price was Rs. 459. Hence, it placed buy orders at around Rs. 31 higher than the last traded price. d. Order no. 14000121412870 got converted into trades nos. 1028 to 1031, 1033, 1034 & 1036. These trades contributed Rs. 31 to market positive LTP. It was also noted that traded quantity for aforementioned trades was in the range of 3-100 shares (total traded quantity was 198 shares). vi. January 17, 2014 a. Extract of order log for January 17, 2014 is given below: Table No.14 ORDER_TIME ORDER NO BUY SELL PANNO CLIENTNAME RATE QTY AUDC ODE R....
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....65 5 U 14:19:58.215322 16000108065692 S AABCA6849D ASHROJ CREDIT INDIA PRIVATE LIMITED 503 237 A 14:20:34.199030 20000105620431 S AEFPV6581E DEEPAK GANESHALAL VYAS 496 4 U 14:23:46.940543 23000088360826 S AEJPG5740E SANDHYA GUPTA 507 4000 A 14:26:34.806872 20000105620431 S AEFPV6581E DEEPAK GANESHALAL VYAS 496 2 U 14:26:41.117968 20000105744002 S AEFPV6581E DEEPAK GANESHALAL VYAS 484.6 2 A 14:29:32.511042 12000105229884 S AJWPK1395H RASHMI PANKAJ KESHARIYA 483.65 4 U 14:29:35.879441 20000105747186 S AZSPS9207N DEEPAK MANGILAL SHARMA 502 50 A 14:34:22.798409 23000088349744 S CDXPS3451H ANJALI SACHIN SAWANT 505 50 D 14:34:27.100545 18000114319969 S CDXPS3451H ANJALI SACHIN SAWANT 485 50 D 14:34:28.888043 13000097544497 S AACHA1811P ARUN AGARWAL 505 4000 A 14:34:49.542913 18000114332015 S CDXPS3451H ANJALI SACHIN SAWANT ....
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....AL 504 4000 U 14:57:11.070719 14000120349955 S AFUPD7871H HEMANT MOHANLAL DANGI 462 97 D 14:58:10.975720 14000120351111 S AFUPD7871H HEMANT MOHANLAL DANGI 462 7 A 14:58:33.188253 18000114354337 B APGPP4703C VINUBHAI JORDAS PATEL 462 10 A 14:58:44.115813 16000108065692 S AEVPM1399D SUNDEEP MITTAL 502 368 U 14:59:13.213639 14000121413506 S BPPPS1566C RUCHITA VISHAL SHAH 505 1200 A 14:59:35.350215 20000105753016 S AEQPG9191L PREETI GUPTA 504 3310 U 14:59:47.765739 20000105753849 S AEQPG9189N MANOJ GUPTA GUPTA 504 2690 U 15:01:48.383316 20000105753016 S AEQPG9191L PREETI GUPTA 504 3310 U 15:01:59.247870 20000105754299 S AEQPG9189N MANOJ GUPTA GUPTA 506 5000 U 15:02:19.286697 20000105753016 S AEQPG9191L PREETI GUPTA 504 3310 U 15:02:32.087510 20000105753849 S AEQPG9189N MANOJ GUPTA GUPTA 504 2690 U ....
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.... U 15:07:48.118660 11000084504461 B APPPS1302H HETAL KISHORBHAI THAKKAR 465.25 100 A 15:07:52.454688 14000121030698 S ABFPB2869J SURENDRA SINGH BENGANI 509 100 D 15:08:32.729602 14000121420230 S ABFPB2869J SURENDRA SINGH BENGANI 506.95 100 U 15:08:39.955289 13000097592131 S AABCA6849D ASHROJ CREDIT INDIA PRIVATE LIMITED 507 400 D 15:08:40.997851 14000123006135 S DFOPS0924H AMMAN KUMAR SHARMA 506.9 100 U 15:08:41.470399 12000105384457 B AJWPK1395H RASHMI PANKAJ KESHARIYA 467 5 A 15:08:45.968572 20000105775820 S AEQPG9189N MANOJ GUPTA GUPTA 507 800 D 15:08:59.015832 14000121420230 S ABFPB2869J SURENDRA SINGH BENGANI 506.75 100 U 15:09:02.995054 14000120361929 B AATPC6825E RAJA GIRDHARI FINANCE PROP.SOBHA CHHAJER 468 50 A 15:09:12.953274 16000108072724 S ASHPK1417A RACHANA HIMANSHU KHARA 506.95 25 A 15:09:25.506416 16000108072724 S....
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.... KUNVARJI KARSHAN NISHAR 471 200 A 15:18:45.592551 11000084504461 B APPPS1302H HETAL KISHORBHAI THAKKAR 465.25 100 D 15:18:47.100373 13000096381648 B ABXPN5222H KUNVARJI KARSHAN NISHAR 465.25 200 D 15:18:58.042247 15000096299592 B AAJPS8689L MAHENDRA C.SHAH 471 200 U 15:18:58.904714 11000084507387 B APPPS1302H HETAL KISHORBHAI THAKKAR 471 100 A 15:19:06.962641 15000096299592 B AAJPS8689L MAHENDRA C.SHAH 465.05 200 U 15:19:11.519016 14000121422292 B ABFPB2869J SURENDRA SINGH BENGANI 471.1 50 U 15:19:19.356416 11000084507387 B APPPS1302H HETAL KISHORBHAI THAKKAR 471 100 D 15:19:22.606967 12000105391400 B AABCA6849D ASHROJ CREDIT INDIA PRIVATE LIMITED 498.5 64 A Buy order placed at price of Rs.498.50 which is much higher than last traded price of Rs 471 b. Extract of relevant Trade log for January 17, 2014 is given below: Table No.15 TRADE DATE CLIENT NAME ORDER_N O TRAD E ID ....
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....nto trade no. 1096 and contributed Rs. 0.05 to market positive LTP. e. Further, at 15:19:22 PM, when the last traded price was Rs. 471, Noticee no.5 placed buy orders at a price of Rs. 498.50 i.e. around Rs 27.5 higher than the last traded price. It was observed that order no. 12000105391400 got converted into trade no. 1320 and contributed Rs. 27.50 to market positive LTP and traded quantity was 64 shares. vii. January 29, 2014 a. Extract of order log for January 29, 2014 is given below: Table No.16 ORDER_TIME ORDER NO BUY SELL PANNO CLIENTNAME RATE QTY AUDC ODE Remarks, if any 13:41:18.508603 13000102027030 S AZKPS4198N SAMEER SURENDRAKUMAR SHAH 494 5 A 13:41:24.588558 16000110183807 S AZKPS4198N SAMEER SURENDRAKUMAR SHAH 494.75 5 A 13:48:39.493244 12000108164321 B AAXPG0444M NIRAV RAJABABU GANDHI 480 50 D 13:48:39.509065 12000108216569 B AAXPG0444M NIRAV RAJABABU GANDHI 481 50 D 13:48:39.519140 12000108224751 B AAXPG0444M NIRAV RAJABABU GANDHI 482 50 D ....
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....09 09:35:39. 432861 13:08:45. 813436 13:01:56. 054994 482.1 -7.6 -1.55 484.85 482.1 15 29/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 160001102 18284 1010 14:48:24. 117115 14:48:24. 149214 14:48:24. 117115 493.5 11.4 2.36 495 495 5 29/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 160001102 18284 1020 14:48:24. 117115 14:48:24. 149648 14:48:24. 117115 494 0.5 0.1 495 495 5 29/01/2014 ASHROJ CREDIT INDIA PRIVATE LIMITED 160001102 18284 1021 14:48:24. 117115 14:48:24. 150189 14:48:24. 117115 494.5 0.5 0.1 495 495 5 c. It can be seen that on January 29, 2014, when the last traded price was around Rs 482, Ashroj Credit India Pvt. Ltd. entered buy orders at price Rs 495 i.e. around Rs 13 higher than the last traded price. d. On perusal of the trade log for order no. 16000110218284, it was observed that order got converted into trade nos. 1010, 1020 & 1021 and contributed Rs. 12.40 to market positive LTP. It was also noted that traded quantity for aforesaid 3 trades was 5 shares each. viii. January 30, 2014 a. Ext....
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....INDIA PRIVATE LIMITED 110000903 78064 1089 14:57:22. 168709 14:57:22. 25508 14:57:22. 168709 500 22 4.6 500 500 40 c. It can be seen that on January 30, 2014, Ashroj Credit India Pvt Ltd entered buy orders at price Rs. 500, when the last traded price was Rs. 478. Hence the buy orders were placed at a price that was around Rs 22 higher than the last traded price. d. On perusal of trade log for order no. 11000090378064, it was observed that said order when converted into trades (trade no. 1089) contributed Rs. 22 to market positive LTP and traded quantity was 40 shares. ix. March 27, 2014 a. Extract of order log for March 27, 2014 is given below: Table No.20 ORDER TIME ORDER NO BUYSE LL CLIENTNAME RATE QTY 11:43:17 AM 12000120194099 S PRAKASH K SHAH SHARES SECURITIES PVT LTD 657.9 4 11:43:24 AM 22000127013053 S RAKESH BANSAL 657.9 58 11:46:47 AM 12000120197430 B ASHROJ CREDIT INDIA PRIVATE LIMITED 661 100 11:47:32 AM 16000134146475 S PARVINDER SINGH 670 134 11:47:33 AM 12000120198061 B ASHROJ CREDIT INDIA PRIVATE....
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....01 98061 1163 11:47:32. 546599 11:47:32. 569205 11:47:32. 546599 670 1 0.15 674 674 1 c. Ashroj Credit India Pvt. Ltd. placed buy orders at price Rs. 661 and Rs. 674, when the last traded price was Rs. 650. Hence, the said buy orders were around Rs. 11-24 higher than the market price. d. On perusal of trade log, it was observed that order no. 12000120197430 contributed Rs. 11 to market positive LTP and order no. 12000120198061 contributed Rs 9 to market positive LTP. Moreover, for the matched trades, the traded quantity is mostly in the range of 1 to 10 shares. X. It is noted from the above examples of the trades placed by the Noticee no. 5 that it repeatedly placed buy orders that were higher than the last traded price. It is also noted that the buy orders were often placed for small quantities, often between 1 to 50 shares only. In other instances, buy orders were placed at high variance from LTP. This was despite the fact that in certain instances, sell orders at lower prices were pending in the system. xi. As noted above, Noticee no.5 was connected to Noticee no.3 (Abhinandan Jain), who was an Independent Directo....
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.... high variance from LTP. Buying above LTP, that too on a large number of occasions is contrary to normal market behavior. 24.I note that Noticee nos. 5 and 6 have stated that the SCN does not bring out any collusion between them and the counterparties to the impugned trades. In this regard, I note that in the matter of Amaresh Pathak Vs. SEBI (SAT Appeal no.332 of 2020, decided on February 16, 2021), the appellants therein contended there was no collusion with the counter party. The Hon'ble SAT, in the matter, held as under: "30. It is true that no direct connection between the seller and the buyer is established in the present case. We do not have material to find out whether respondent SEBI had investigated the said connection. However, in my view the insistence solely on the establishment of the connection or non-prosecution of the buyers would be against the very principle that the facts are to be established on preponderance of probability and not on the requirement that the facts in issu should be proved beyond reasonable doubt or to the hilt." From the above, I note that collusion between buyer and seller is not a sine qua non for establishing the charge o....
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....eriod. Together, Noticee nos. 5 and 6 have contributed 8.09% to market positive LTP during Patch-3 of the investigation period. The fact that Noticee nos. 5 and 6 were placing buy orders at higher price than LTP, as seen from the order log and trade log extracts in Table nos.4-21 above, leads to the conclusion that the trades were not in the ordinary course of business. I also note that it is a function of the market that every trade that takes place establishes the price of the scrip and the price fluctuates with every buy/sell order which is executed. That having been said, placing buy orders above the LTP on multiple occasions cannot be considered to be trades executed in the normal course, especially when such trades had a disproportionate effect of increasing the price of the scrip. The motive appears to be to set the direction of a price rise in the scrip consciously. The Hon'ble Securities Appellate Tribunal (hereinafter referred to as "the Hon'ble SAT"), in the matter of BP Comtrade Pvt. Ltd. Vs. SEBI (Appeal No. 189 of 2020, Date of Decision: November 20, 2020), while dealing with a matter pertaining to LTP manipulation, held as under: "10. Having heard th....
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.... than the last traded price, whereas in the matter at hand, buy orders were being placed at prices that were significantly higher than the last traded price. However, I am of the view that the rationale of the above cited order squarely applies to the matter at hand. There is no rationale for a trader to place buy orders that are much higher than the last traded price, as any reasonable buyer would want the lowest possible price. In the case at hand too, as discussed above, the buy orders placed by Noticee nos. 5 and 6 were of varying quantities and often small quantities. In the present matter too, the Noticees have stated that they had placed some orders above LTP, some at LTP and some below LTP to contend that their trades were in ordinary course and they were not involved in the manipulation of the scrip. As stated in the above cited order, the same does not help the noticees since the overwhelming evidence is clearly towards placing buy orders above the LTP. Together, Noticee nos. 5 and 6 contributed more than 8% to the positive LTP, which is a significant deviation from market equilibrium for 2 entities. 29. As noted above, the Noticee nos. 5 and 6 have merely stated that ....
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.... of Noticee nos.5 and 6 facilitated the LTP manipulation in the scrip of PFL. 32. It was further observed that Noticee Nos. 5 and 6 were closely connected to the broker, Fair Intermediate Investment Pvt. Ltd. (Noticee No. 7), through whom they placed the aforementioned orders. Mahesh Meetal, Karta of Mahesh Meetal HUF, is a Designated Director of Noticee no.7. Further, Mr. Mahesh Mittal and Ms. Meena Agarwal, wife of Mr. Sandeep Mittal (director of Ashroj Credit India Pvt. Ltd.), were 53.09% shareholders of Fair Intermediate Investment Pvt. Ltd. during the investigation period, i.e., they held a controlling stake in the broker. The SCN also observed that Noticee No. 7 has the second highest broker concentration of 18.92% on sell side during the entire investigation period. 33. In respect of the allegations made out in the SCN against it, Noticee no. 7 has stated that: a. Noticee no.7 is a broker and did not execute any proprietary trades. The clients are treated on an arms-length basis. b. The SCN does not bring out any prior meeting of minds/ circular trading/ synchronised trading. c. The Noticee had executed valid contract notes for every trade. A....
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....TTAL 16,00,000 36. As noted above, Abhinandan Jain (Noticee no. 3) has stated that the above transfers were for sale of 1,70,000 shares and 1,60,000 shares of Fair Developers Pvt. Ltd. to Sandeep Mittal and Mahesh Mittal, respectively. Noticee no. 3 also stated that he was the promoter director of Fair Developers Pvt. Ltd. In April 2013, he resigned as director and also sold shares of Fair Developers Pvt. Ltd. to Sandeep Mittal and Mahesh Mittal. I note that the above fund transfer has been brought out only to establish connection of Noticee no. 3 with Noticee nos.5 and 6. Noticee nos.3, 5 and 6 have not disputed the above transaction, and hence the connection also cannot be denied. As Mahesh Meetal is the Karta of Mahesh Meetal HUF (Noticee no. 6) and Sandeep Mittal is the director of Ashroj Credit India Pvt. Ltd. (Noticee no. 5), I am of the view that Abhinandan Jain (Noticee no. 3) is also connected to Noticee nos.5 and 6, who manipulated the price of the scrip of PFL by repeatedly placing buy orders above the last traded price. 37. As noted above, Abhinandan Jain (Noticee no. 3) was an Independent Director of PFL (Noticee no.1). The Chairman and Managing Director of PF....
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....dent Director. His role was limited to giving advice on Tax related matters. c. He had received Rs. 17 Lakh on April 15, 2013 from Mr. Sandeep and Rs. 16 Lakh on April 16, 2013 from Mr. Mahesh for the sale of 1.7 Lakh and 1.6 Lakhs shares respectively of Fair Developers Private Limited. d. The shares of Fair Developers Private Limited were transferred in April 2013 whereas the alleged price manipulation as stated in the SCN is from July 2013. e. He knew Mr. Nickunj Shah in a professional capacity. f. He had never traded in the scrip of PFL. g. Naresh Jain as referred in Investigation Report (PAN No. AACPJ9811A) is not the same as one whose HUF had a fund transaction with my wife. h. A serious allegation of fraud requires strict and compelling proof. i. The penalty/ action proposed to be taken must be mentioned in the SCN, and failure of the same is violation of the principles of natural justice. 39. From the above submissions, I note that Noticee no. 3 (Abhinandan Jain) has accepted the connections set out in the SCN. Noticee no. 2 (Pulla Amresh Kumar) has also accepted that he was introduced to Noticee no.4 (Nickunj....
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....ributable to the connected entities (i.e. Noticee nos. 5 and 6) was in Patch 3 of the investigation period, being January 13, 2014 to May 19, 2014, as noted in Table no.3 above. Further, from Table no.3 above, I note that in Patch 2, the closing price of the scrip was Rs.508. Hence, even if Noticee no.2 had sold the shares on the last day of Patch 2, he would have earned some profit, which cannot be ignored while computing the quantum of ill- gotten gains. As the investigation has attributed manipulation to a specific period, i.e. Patch 3, I would take the closing price of the scrip in Patch 2 as the basis for calculation of ill-gotten gains. Noticee no.2 sold a total of 14,554 shares in Patch 3, which is the period of manipulation by connected entities. If the Noticee had sold his shares even on the last day of Patch 2, he would have got Rs. 73,93,432 (14,554 shares multiplied by closing price of Patch 2, i.e. Rs.508) and his profits would not have been tainted by the price rise due to LTP manipulation. Hence, the ill-gotten gains are calculated hereunder: Table No. 25 No. of shares sold in Patch 3 Closing price on the last day of Patch 2 Total Value of shares @ closin....
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....CN alleges that Noticee no.4 was introduced to Noticee no. 2 by Noticee no. 3. In their submissions before me, Noticee nos. 2 and 3 have not denied the same. I further note that as per the SCN, Noticee no.4 (late Nickunj Shah) received 4,50,000 shares on conversion of the warrants as noted above and sold 1,92,782 shares at a VWAP of Rs.563.43 on December 10, 2013, when the PCAS was in force, i.e. when the scrip was illiquid. The SCN has alleged that the Noticee no.4 (late Nickunj Shah) made a profit of Rs. 10.57 crore. I note that the date of sale of shares by Noticee no. 4 falls in patch 2 of the investigation period. As noted above, the LTP manipulation by Noticee nos. 5 and 6 was during Patch 3 of the investigation period. Hence, Noticee no.4 sold the shares prior to the manipulative trades of Noticee nos. 5 and 6 to increase the price of the scrip. Hence, I am of the view that it cannot be stated that Noticee no. 4 was part of the manipulation. The SCN does not bring out any other fact or allegation to show that Noticee no.4 was part of or benefited from the scheme of manipulation. In view of the same, I find that the charge of violation of the PFUTP Regulations, 2003 against N....
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....the above mentioned transaction, Noticee no.2 failed to make the requisite disclosure in Form D under Regulation 13(4) and 13(4A) read with 13(5) on 16 more occasions. Details of the 16 instances are given below: Table No.27 Sl.no. Date of transaction Sl.no. Date of transaction 1 08/05/2013 9 19/05/2014 2 20/01/2014 10 20/05/2014 3 24/01/2014 11 08/07/2014 4 04/03/2014 12 09/07/2014 5 05/03/2014 13 14/07/2014 6 06/03/2014 14 14/10/2014 7 13/05/2014 15 16/10/2014 8 16/05/2014 16 31/10/2014 52. Noticee no. 2 has stated that he had filed the disclosures in Form C to the Company and in turn, the Company had filed the disclosures in both Form C and Form D to BSE. Noticee no.2 has also submitted copies of the same before me. From the BSE website, I note that the Form D had been filed by the Company. I note that the disclosures in Form D, as available on the BSE website, have been stated to be filed under Regulation 13(4) read with 13(5). However, Regulation 13(4A) of the PIT Regulations, 1992 is not mentioned in the said forms. I also note that in certain instances, the discl....
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....lidation of disclosures filed on nearby days, and not due to any malafide intention. Hence, Noticee no.2 has admitted that there was a delay in making the disclosures. I note that the delays were of a few days, even though there is a violation of Regulation 13(5) of the PIT Regulations, 1992 by Noticee no.2. Hence, I am inclined to take a lenient view in respect of penalty. 57. The SCN further alleges that the Company failed to disclose the appointment of Srimanthula Harish as Chief Financial Officer of the company on April 25, 2019. The SCN states any change in key managerial personnel such as Chief Financial Officer is a material event and has to be disclosed to the stock within twenty-four hours from the occurrence of such event as per Regulation 30 of the LODR Regulations, 2015. Having failed to do so, it was alleged that Noticee no. 1 violated Regulation 30 of the LODR Regulations, 2015. 58. In this regard, the Company has stated that the non-disclosure was unintentional and the details of the aforesaid appointment of CFO was already in the public domain. The Company has stated that no loss has been caused to any investor in this regard. I take note of the fact that the ....
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....vinder Singh placed sell orders with order rate lower than LTP and negligible quantity to match the already existing buy orders. In 10 instances, Parvinder Singh repeatedly placed sell orders (with negligible order quantity) at a price lower than LTP, before buyer places the buy order. For the top 10 trades of Parvinder Singh contributing to market negative LTP, the sell order (last modified) quantity was 1 share for 5 trades, 2 shares for 3 trades, and 5 shares and 11 shares for the remaining 2 trades. 62. The Noticee nos. 8 and 9 have stated that they were not connected to any of the other Noticees. The SCN states that Noticee No.8 is not connected in any manner to the other Noticee(s). In view thereof, contention of Noticee Nos.8 and 9 that they were not connected to PFL or its promoters and other noticee(s) is accepted. Noticee nos.8 and 9 have also stated that they had no connection with any counterparty, and the SCN has also not brought out any connection of Noticee nos.8 and 9 with the counterparties to the impugned trades. The Noticees have stated that they traded in a similar manner in several scrips. Noticee no.8 has also stated that the price of the scrip was rising a....
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....inst him is disposed of without any directions. 66. In respect of the findings against the Noticees, I note that Noticee no.2 has made an ill-gotten gain of Rs. 9,61,722, as discussed above. Hence, the same is liable to be disgorged. In view of the scheme of manipulation entered into by Noticee nos. 5, 6 and 7 so as to aid and benefit Noticee no.2 and Noticee no.3, having acted as the intermediary between them, I find that all of them have jointly employed a fraudulent scheme in the securities market as contemplated under Regulations 3(a) to (d) and 4(1), 4(2)(e) of the PFUTP Regulations, 2003. 67.I am therefore of the view that Noticee nos. 2, 3, 5, 6 and 7 are liable to be restrained from accessing the securities market and prohibited from dealing in securities under Sections 11(1), 11(4) and 11B(1) of the SEBI Act, 1992. I note that Noticee no.7 has facilitated its connected entities in the whole scheme and the violation of the Code of Conduct under Broker Regulations alleged against it is not in respect of third party clients. Hence, in my view, Noticee no.7 needs to be restrained from execution of proprietary trades for a specified period. The violations as established a....
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....ipulative trades in the securities market and exercise care and caution at all times in this regard; (vi) The Noticee nos. 2, 3, 5, 6 and 7 are imposed with monetary penalties, as specified hereunder: Sl. No. Name of Noticees Provisions under which penalty imposed Penalty Amount 1 Pulla Amresh Kumar Section 15HA of the SEBI Act, 1992 for violation of PFUTP Regulations, 2003. Rs.10,00,000/- (Rupees Ten Lakh only) to be paid jointly and severally 2 Abhinandan Jain 3 Ashroj Credit India Private Ltd 4 Mahesh Meetal HUF 5 Fair Intermediate Investment Private Ltd. 6 Pulla Amresh Kumar Section 15A(b) of the SEBI Act, 1992 for non- disclosures under PIT Regulations, 1992. Rs.1,00,000/- (Rupees One lakh only) (i) The Noticees shall remit / pay the said amount of penalties within 45 days from the date of receipt of this order. The Noticees shall remit / pay the said amount of penalties through either by way of Demand Draft in favour of "SEBI - Penalties Remittable to Government of India", payable at Mumbai, or through online payment facility available on the website of SEBI, i.e. www.sebi.gov.in on the following pa....