SEBI: people indulging or abetting in manipulative, fraudulent and deceptive transactions shall be suitably penalized

SEBI: people indulging or abetting in manipulative, fraudulent and deceptive transactions shall be suitably penalized

A penalty of INR 5lakhs has been imposed on each of the Noticees 1 and 5 i.e., Manish Manubhai Raja and Girishkumar Prabhudas Ruparelunder by the Securities and Exchange Board of India(SEBI).

Herein, SEBI conducted an investigation into the trading activities of certain entities in the scrip of Atlanta Infrastructure and Finance Ltd., (AIFL) (Earlier known as Kadvani Securities Ltd) and into the possible violation of the provisions of the SEBI Act, 1992 and various Rules and Regulations made there under during the period from August 02, 2010 to January 06, 2015(Investigation Period/ IP).

The investigation initially identified a group of 29 connected entities (Group entities), who had traded in AIFL scrip and their inter se connection was noticed on the basis of their UCC details, off market transactions, physical share transfers, financial transactions and MCA data etc. It was further observed that out of the said 29 entities, the alleged manipulative trades in AIFL scrip were executed by 8 entities (Noticees 1-8) which did not appear to be genuine trades executed in normal course of dealing in securities.

Those 8 entities were alleged to have engaged in manipulating the price of the scrip of AIFL and thereby creating a misleading appearance of trading in the shares of the Company, through their trading in the scrip during Patch-2 and Patch-6 of the Investigation Period.

Accordingly, it was alleged that the Noticees had violated the provisions of Regulations 3(a),(b),(c),(d),4(1), 4(2)(a) and (e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (PFUTP Regulations).

Considering the unusual & unfair trading pattern and the frequency with which trades were placed by the Noticee 1 during the Patch-2 and by the Noticee 5during the Patch-6 of the Investigation Period and other attending circumstances, the AO was convinced to hold that these two Noticees were not acting as a genuine trades and had no bona fide intention to deal in the shares of AIFL.

Noticee 1had indulged in executing 47 trades with Pritiben Anil Gandhi, consistently during Patch-2 of the Investigation Period resulting in to a cumulative negative LTP contribution of Rs. 20.40 which constituted 17.48% to total market negative LTP.

Similarly,in-spite of getting sufficient sell orders offers with abundant quantities of shares being available in the market, the Noticee 5deliberately placed buy orders for smaller quantities of shares of AIFL in each of his transactions and deliberately executed 141 trades during Patch-6 of the Investigation Period, thereby contributing to a market positive LTP of Rs. 16.81, which constituted 14.35% to total market positive LTP in the said scrip.

It was held that the trading behaviour of these two Noticees viz., Manish Manubhai Raja and Girishkumar Prabhudas Ruparel in the scrip of AIFL had been ill-motivated, manipulative and fraudulent in nature and was unacceptable as the same was in gross violation of Regulations 3 (a), (b), (c), (d) and 4 (1), 4 (2) (a), (e) of SEBI PFUTP Regulations, 2003.

It was also observed that from the unique and strange trading pattern displayed by the Noticee 5, wherein he placed buy orders in the scrip of AIFL over a prolonged period in variation to the LTP in the scrip, sans any market fundamentals of the Company and from his uncanny eagerness to buy the scrip above the LTP on a frequent basis the Noticee did not give the impression of a normal trading behaviour.

It was held that the trades executed by the Noticee 5during Patch-6 were nothing but unfair and manipulative trades driven by an ulterior motive to artificially raise the price of the scrip against market fundamentals of the scrip and also to create a misleading appearance of trading in the scrip to lure the other market participants and innocent investors.