SEBI imposes penalties on all the 22 entities in the matter of Synergy Bizcon

SEBI imposes penalties on all the 22 entities in the matter of Synergy Bizcon Ltd

Investigation showed it created a misleading appearance of trading and contributed to an increase in the scrip price in a manipulative manner

In the matter of Synergy Bizcon Limited, SEBI has imposed penalties on all the 22 entities varying from Rs. 5 to 15 lakh.

Securities and Exchange Board of India (SEBI)investigated the scrip of Synergy Bizcon Limited (Synergy/Company) inter-alia to ascertain any possible violation of the provisions of SEBI Act, 1992 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations,2003 (PFUTP Regulations, 2003) in the trading of certain entities during the investigation period of 26 May 2015 to14 October 2016.

Pursuant to the investigation, it was observed that a group of entities viz. Jinesh Bhatt, Deepak Pandurang Vikhape, Pooja Jinesh Bhatt, Shriti Jinesh Bhatt, Nagamamaheshwar Balraj Yellamellai, Yogesh Bhawansingh Bisht, Rajnish Tiwari, Avinash Tiwari, Sanjay Saha, Amarender Kumar, Slesha Pradeep Ghosh, Sanjay Gupta, Anji Reddy Vanga, Ravindra Nath Mishra, Vineet Sinha, Ganesh Nainsingh Sunar, Vishal Anand, Elizabeth Peter Gonsalves, Shwetha Ashthana, Ruben Chetty, Preeti and Lalit (Noticee-1 to 22/Collectively as Noticees) indulged in trades that did not result in the change of beneficial ownership, created the misleading appearance of trading and contributed to increasing the scrip price of Synergy Bizcon Ltd in a manipulative manner.

It was affirmed in this case that Noticees cannot avoid the responsibility for the misuse of their accounts by third parties by merely stating thatthey were not aware of the purpose for which their accounts were used. The Noticees had clearly stated that they allowed other parties to use their accounts in hopes of profits.

Name lending is a serious offence which enables manipulators to carry out their nefarious activities by masking their identity and the ultimate beneficiary of the manipulative scheme of things. In this case, even if it was accepted that third parties had used the bank/demat accounts of Noticees, there were no documents on record of any of their dealings in the scrip of Synergy and therefore had escaped the regulatory supervision/surveillance which not only threatened the integrity of the market but also adversely affected interest of the investor, if such activities remain unchecked.

The Adjudicating Officer(AO) observed that the trading pattern of the Noticees did imply fraudulent intent to create artificial volume and manipulation of price in the scrip of Synergy. The participants involved in such trades made use of their prior knowledge and entered orders knowing that those orders will be covered by reverse orders of similar size, time and price.

This increased the trading volumes in the underlying security and generated interest from other investors. The AO was of the view that the only intention behind such buying or selling was for raising or depressing prices of the underlying securities by increasing trading volumes.

It was also held that the scheme, plan, device and artifice exhibited in the said pattern of trading tantamount to fraud in the securities market in as much as it involves manipulative transactions in securities and misuse of the securities market.

The manipulative transactions of the Noticees were, prima-facie, covered under the definition of 'fraud' and the dealings of the Noticees as were "fraudulent", as defined under regulation 2(1)(c) of the PFUTP Regulations, 2003 and prohibited under the provisions of regulations 3(a), (b), (c), (d), 4(1), 4(2)(a), (e) and (g) of PFUTP Regulations, 2003 read with Section 12A (a),(b) & (c) of the SEBI Act.

Therefore, it was concluded that the trades of the Noticees created a misleading appearance of trading and contributed to increase in the scrip price of Synergy in a manipulative manner.