before the adjudicating officer securities and …rajeev seth bwhps7455r naresh kumar aojpk6967p...

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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDERS NO: AJS/AO/ 01/2011]

UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT,

1992 READ WITH RULES 5 OF SEBI (PROCEDURE FOR HOLDING ENQUIRY AND

IMPOSING PENALTY BY ADJUDICATING OFFICER) RULES, 1995

In Respect of

Name of Noticee PAN of Noticee

Naresh Gupta AIQPG6739G

Monika Gupta AIYPG3105A

Anjani AIFPA1297G

Manish Gaurav AILPG0774A

Rajeev Seth BWHPS7455R

Naresh Kumar AOJPK6967P

Amit B Aggarwal AIAPA8555C

In the matter of

Vipul Ltd

BRIEF FACTS OF THE CASE

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted

investigation in trading in the scrip of the scrip of Vipul Ltd. (hereinafter referred to

as “Vipul”) for the period from May 21, 2008 to October 31, 2008 (hereinafter

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referred to as ‘investigation period’). The scrip was listed at Bombay Stock

Exchange (“BSE”).

2. The role of brokers and their clients who had traded in the scrip of Vipul was

investigated. Investigation revealed that a group of entities (hereinafter referred to as

“Group”), some of whom were connected, were trading significantly in the scrip and

were indulging into synchronized trading/ circular trading/ reversal of trades in a

significant manner.

3. This group was trading through several brokers including Unicon Securities Pvt Ltd

(hereinafter referred to as “Unicon”) and SAM Global Securities Ltd (hereinafter

referred to as “SAM”) in such a manner that led to creation of artificial volumes in

the scrip of Vipul by executing synchronized and structured deals. Therefore, the

aforementioned members of the Group are suspected to have violated Regulation

4(1), 4(2) (a), (b), (e) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade

Practices) Regulations, 2003.

4. Further, it was observed during the course of investigation that there were two set of

members of the group. First set of members was the major contributor to the price

rise, artificial volume and synchronised trading (hereinafter referred to as “Main

group/ Noticee(s)”). The second set of members (hereinafter referred to as “Other

group”) indulged in reversal of trades on very few days and their contribution to

market volume was not very significant. Following are the main members of the

group or noticees:-.

i. Naresh Gupta

ii. Monika Gupta iii. Anjani iv. Manish Gaurav v. Rajeev Seth

vi. Naresh Kumar vii. Amit Aggarwal

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5. It was also observed that members of the Group used to place number of buy and sell

orders alternatively, mostly for the same quantity with each subsequent order at a

price higher than previous order within a span of 1 to 3 minutes clearly indicating

towards the intention to raise the price of the scrip and creating artificial volume in

the scrip.

6. The aforesaid alleged violations, if established, make the Noticee(s) liable for

monetary penalty under sections 15 HA of Securities and Exchange Board of India

Act, 1992( hereinafter referred to as “SEBI Act”)

APPOINTMENT OF ADJUDICATING OFFICER

7. The undersigned was appointed as Adjudicating Officer, vide SEBI order dated June

11, 2009 under Section 15 I of SEBI Act read with Rule 3 of SEBI (Procedures for

holding inquiry and imposing penalties by Adjudicating Officer) Rules,1995

(hereinafter referred to as the “Rules”) to inquire into and adjudge under Section 15

HA of the SEBI Act, the alleged violation of Regulation 4(1), 4(2) (a), (b), (e) and

(g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations,

2003(hereinafter referred to as “PFUTP” Regulations) committed by the Noticee(s).

SHOW CAUSE NOTICE, REPLY & PERSONAL HEARING

8. Show Cause Notices (hereinafter referred as “SCN”) dated February 18, 2010 were

issued to the Noticee(s), under Rule 4(1) of Rules, to show cause as to why an inquiry

should not be held and penalty be not imposed on them under section 15 HA of SEBI

Act for alleged violation specified in the said SCN. Acknowledgment of same is on

record.

The replies of the noticees have been mentioned herein below entity wise:-

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9. Naresh Gupta vide letter dated March 03, 2010 sought time to submit his reply and

his reply was received on May 05, 2010. He has in its reply mentioned the following:

1) He is a cancer patient and due his ill health, he has not been able to reply to SCN on time.

2) All the accounts of Naresh Gupta are looked after by Mr. Rajeev Seth. Therefore, he was not aware of the activities being conducted through his account.

3) He is financially not strong enough to carry out manipulative activity as alleged.

4) He has not intended to carry out any of the manipulative activities that have been alleged

10. The reply to the SCN from Monika Gupta (hereinafter referred to as Monika) was

received on March 15, 2010 wherein she mentioned the following:

1) All the trades that have been done from her account were without her knowledge and intention.

2) She has no knowledge of stock market and does not understand what reversal of trade means. She is not aware of any company with the name Vipul Ltd. and her investment in the stock market is less than Rs. 1 lakh.

3) Mr. Rajeev Seth was dealing in her account and therefore she was not aware of

the activities being done through her account. Further, she has lost money in the hands of Rajeev Seth.

4) She had not intended to carry out any of the manipulative activities that have been alleged.

5) She offered to pay Rs. 10,000 (Ten Thousand) as settlement charges to end the matter.

She was informed by SEBI vide letter dated March 23, 2010 regarding the guidelines

through which she could apply for consent terms and was advised to apply as per

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procedure within 14 days of receipt of the letter failing which it would be presumed

that she has no reply to submit and matter would be proceeded further.

She once again vide her letter received by SEBI on 31st May, 2010 informed that she

is not that educated and she cannot understand the procedure and she could offer only

Rs 10,000/- (Rs Ten Thousand only) because she has lost all her savings in Vipul.

In the absence of any application for consent terms from Monika, the adjudication

proceedings were continued.

11. A letter was received from Anjani on May 5, 2010 stating that he has been informed

by his broker SAM that a SCN has been issued on his name and he will reply within

15 days to the same. However, no reply was received from him thereafter.

12. The SCN dated 18th February, 2010 issued to Mr Manish Gaurav (hereinafter referred

to as ‘Manish’) was returned undelivered and the same was forwarded through his

broker SAM on March 17, 2010 and a reminder on June 15, 2010. Reply to the same

was received on June 24, 2010 wherein he mentioned that he has not done any

manipulation in the market, intentionally. He further stated that he does not have that

much money to do manipulation and apologized for the mistake.

13. Rajeev Seth, in his reply, received on May 26, 2010 mentioned the following:-

1) He was working in Balaji Investment Solutions.

2) His remuneration at Balaji Investment Solution consisted of a bonus of 5% on the

trading done by him and to earn some extra commission he over traded on behalf

of his clients.

3) Currently, he has stopped trading in the stock market.

4) He also mentioned about his weak financial condition and apologized for the

mistake committed by him.

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14. A reply which was hand written in English, was received on March 11, 2010 from

Naresh Kumar, whereby he has informed us that he is working as a field executive in

a company. His salary is only Rs. 6,000(Rs. Six Thousand) and his account was

managed by Mr. Rajeev Seth as he has no knowledge of stock markets. He started his

account with Rs. 10,000(Rs. Ten Thousand) and has now stopped trading after

suffering losses.

15. A reply from Naresh Kumar was again received on April 16, 2010. This time he has

informed us that he is working as an office boy in Unicon and he has no knowledge

of Stock market. He has never traded in the shares through SAM and Bonanza

Portfolio and has never received any letter or contract note or has any financial

connection with them. He also mentioned that he has no knowledge of English

Language.

16. Naresh Kumar also submitted a copy of statement of his Bank Account with HDFC.

His salary was Rs. 2,594 according to the bank account statement submitted by him.

17. The SCN issued to Amit B Aggarwal was returned undelivered. Therefore, the SCN

was pasted at the premises of the last known address of Amit B Aggarwal at 53-D,

SRA, Shipra Riviera, Indirapuram, Ghaziabad – 201012. Proof of the same is

available on record.

18. In the interest of natural and in order to conduct an inquiry as per Rule 4(3) of the

Rules, the Noticee(s) were granted an opportunity of personal hearing in the months

of August and September of 2010.

19. Mr Prakash Shah, Advocate appeared on behalf of Naresh and Monika on August 16,

2010. In addition to the submissions made earlier by Naresh and Monika, Mr. Prakash

Shah made further submissions on their behalf, which are as below:

1) Mr. Naresh Gupta is a cancer patient since 2006.

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2) Naresh has been trading in stock market since 1998 as retail investor.

3) Naresh is having his account with SMC Global for around 10 years and the

account with other brokers was opened around 2007-2008. Monika is a housewife and she opened her account only in 2008

4) Both Naresh and Monika are related to each other as father in law and daughter in law.

5) Both entered into arrangement with Rajeev Seth who used to operate their account with various brokers.

6) They have only carried out day trading in the scrip of Vipul Ltd. i.e. bought in the first half and sold in the latter half of the day.

7) As per Para 3.3 of the Show cause notice, relationship has been established between Monika Gupta & Naresh Gupta which we accept as Naresh Gupta is father in law of Monika Gupta. However, no connection has been established between Monika Gupta & Naresh Gupta and other clients with whom they have alleged to have traded.

8) There has been no price rise in the scrip during the alleged period.

9) All the volume has been carried out in the stock exchange and recorded therein, hence this is all genuine volume.

10) Mr Prakash Shah also handed an undated letter addressed to Dy General Manager, SEBI, Mumbai written supposedly by Rajeev Seth wherein he has confirmed that he has carried out transactions in various client accounts in the scrip of Vipul Ltd

20. Further, Naresh & Anjani also submitted a copy of letter sent by Mr. Rajeev Seth

(“Rajeev”) wherein inter-alia, following is mentioned by Mr. Rajeev Seth,

1) He was working as an employee of Balaji Investment Solutions and he used to get a commission of 5% in addition to his salary.

2) In order to increase his commission, he started doing heavy trading in the scrip of Vipul.

3) He has also admitted that all the trading that has happened on behalf of the trading account of Naresh Gupta and Monika Gupta has been done by him. He has now stopped trading in the Stock Market.

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21. Naresh also submitted a letter by his son, Mr. Rajeev Gupta, addressed to SEBI as a

reply to letters sent earlier asking them their comments on the trading activity of

Naresh Gupta and Monika Gupta in the scrip of Vipul. Rajeev Gupta has, inter-alia,

mentioned following in the said reply,

1) He is connected with the Company Firstcall Consultancy Services (P) Ltd as a director and also with Shree Balaji Investment Solutions as a partner, which are mainly marketing companies.

2) These companies introduced clients to Unicon and SAM. His name appears as the introducer in the KYC of the clients introduced by these companies. There are several clients which are introduced by these companies.

3) In this case, 10 out of 400 clients introduced by them were observed to be trading in the scrip of Vipul. He or any of his employee don’t have any personal connection with any of the clients they introduce as they find them merely by tele-calling etc.

4) Monika Gupta is wife of Mr Rajeev Gupta and is also one of the director of Firstcall Consultancy Services Pvt. Ltd. Naresh Gupta is father of Mr. Rajeev Gupta.

5) Anjani has also worked for him, but he can’t comment on trading done by him as there was no restriction on him, as his employee, for trading in stock market. They can’t be held liable for the suspicious activity in the market of their employees like in the case of Anjani.

22. Mr Prakash Shah, Advocate, also appeared on behalf of Anjani on September 29,

2010 and made following submissions on his behalf:

1) Anjani is an employed person withdrawing a small salary

2) He carried out the transactions in the stock market to supplement his income source.

3) He bought and sold a total of 197,465 shares of Vipul Ltd during the investigation period. Hence, it has not affected the price of the scrip.

4) He is not connected to Vipul Ltd. or any of their promoters and directors.

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5) He has not done any off-market transactions in the scrip

6) He is not aware of his demat/trading accounts, neither he is aware of any trading done through them as all his accounts were managed by Rajeev Seth and he never received any intimation from any of the brokers for trading done through his accounts.

7) He has not received or made any payment to Rajeev Seth for trades executed in Vipul Ltd.

23. Apart from Mr. Prakash Shah, who appeared on behalf of Naresh Gupta, Monika

Gupta and Anjani, none of the other noticee(s) appeared for the personal hearing

despite their acknowledgement to our notices and confirmation of appearing for the

same. The confirmations by the noticee(s) are on the record.

CONSIDERATION OF ISSUES AND FINDINGS

24. The issues that arise for consideration in the present case are:

• Whether the Noticee has violated Regulations 4(1), 4(2) (a), (b), (e), and (g) of

PFUTP.

• Does the violation, if any, on the part of the Noticee attract monetary penalty

under sections 15 HA of SEBI Act?

• If so, what would be the monetary penalty that can be imposed taking into

consideration the factors mentioned in section 15J of SEBI Act?

25. The relevant provisions of PFUTP Regulations alleged to have been violated and the

penal provisions of SEBI Act read as under:-

“4. Prohibition of manipulative, fraudulent and unfair trade practices

(1) Without prejudice to the provisions of regulation 3, no person shall indulge in

a fraudulent or an unfair trade practice in securities.

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(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade

practice if it involves fraud and may include all or any of the following,

namely:—

(a) indulging in an act which creates false or misleading appearance of

trading in the securities market;

(b) dealing in a security not intended to effect transfer of beneficial

ownership but intended to operate only as a device to inflate, depress or

cause fluctuations in the price of such security for wrongful gain or

avoidance of loss;

(c ) …….

(d) ………….

(e) any act or omission amounting to manipulation of the price of a security;

(f) …………..

(g) entering into a transaction in securities without intention of performing it

or without intention of change of ownership of such security;

(h) …………

(i) …………

(j) …………

(k) …………

(l) ………….

(m) ………….

(n) circular transactions in respect of a security entered into between

intermediaries in order to increase commission to provide a false

appearance of trading in such security or to inflate, depress or cause

fluctuations in the price of such security”

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“SEBI Act, 1992

15HA.Penalty for fraudulent and unfair trade practices.- If any person indulges

in fraudulent and unfair trade practices relating to securities, he shall be liable

to a penalty of twenty-five crore rupees or three times the amount of profits made

out of such practices, whichever is higher”.

26. I have perused the Investigation report, replies provided and other documents

available on record. I find the following:-

a. The price of the scrip opened at Rs.139.95 on May 21, 2008, reached a high of

Rs.157 on the same day and thereafter fell gradually to close at Rs.34.9 on

October 31, 2008 after reaching a low of Rs.34.85 on the same day. Total

number of shares traded during this period was 1,940,722 shares with average

daily volume of 17,023 shares.

b. Out of the complete period of investigation, during the period from May 21,

2008 to July 7, 2008, majority of volume of shares (1,292,439 shares) was traded

with average daily volume of 38,013 shares. This was the same period when the

Group members were most active in the scrip. During this period, price of the

scrip gradually fell to Rs.54.15 from Rs.139.95 on May 21, 2008. During the

period from July 7, 2008 to October 20, 2008, price of the scrip was trading in

the range of Rs.50 to Rs.94 with average daily volume of 6,348 shares.

Thereafter, the price of the scrip fell gradually to close at Rs.34.9 on October 31,

2008.

c. It is observed that during the period from May 21, 2008 to July 7, 2008, Group

Members while trading through 6 brokers purchased 1,148,557 shares and sold

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1,148,589 shares accounting for around 89% of gross market purchase and sell

volume.

d. During the abovementioned period, they indulged in 2,375 structured trades for

1,073,626 shares where buy and sell order quantity and rate were same and time

between placing of buy and sell orders was less than 60 seconds. Out of these

2,375 trades for 2,360 trades of 1,067,431 shares, time difference between

placing of buy and sell orders was less than 10 seconds.

e. Further, most of the structured trades mentioned above were also in the nature of

reversal of trades wherein in the first trade, one entity of group (suppose A) enter

buy order for certain amount of shares at certain rate which matches with sell

order for same quantity at same rate placed by same entity or other group entity

(suppose B) at around same time and within few seconds of first trade, this

position was reversed with entity B on the buy side and entity A on the sell side

with same of quantity of shares. Such trading had accounted for 83.07% of

market volume of 1,292,439 shares observed during period from May 21, 2008

to July 07, 2008. Such trading was observed on 32 days out of 34 trading days

during this period and accounted to daily market volume in the range from

41.89% to 96.92%. Considering such a large number of transactions, matching of

orders cannot be a co-incidence. An illustration of their trades for May 21, 2008

is as follows:

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Aforesaid trades accounted for 78.74% of the day’s volume. Thus the increase in

the volumes in the security can be attributed to the trades done by this group of

connected trading through different brokers.

f. From the order log, it is observed that these clients used to place number of buy

and sell orders alternatively mostly for the same quantity with each subsequent

order at a price higher than previous order within a span of 1 to 3 minutes. For

example, on June 6, 2008, the client Gaurav Manish while trading through the

broker SAM Global Securities Ltd placed 10 buy orders and 10 sell orders of

quantity of 481 each alternatively within time from 14:56:46 to 14:59:05 i.e.

within just 139 seconds.

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Order Time Order No

Buy Or Sell

AUD Code Rate

Order Quantity

Executed qty

Execution Time

14:56:46 47022800020702672 S A 120.75 481 481 14:56:4714:56:54 47024200000504667 B A 120.8 481 481 14:56:5514:57:02 47024200000504668 S A 120.85 481 481 14:57:0214:57:07 47020100021289254 B A 120.9 481 481 14:57:0814:57:13 47022900020675187 S A 120.95 481 481 14:57:1314:57:18 47024100000498827 B A 121 481 481 14:57:1814:57:24 47022900020675188 S A 121.05 481 481 14:57:2514:57:30 47024100000498828 B A 121.1 481 481 14:57:3014:57:35 47022800020702674 S A 121.15 481 481 14:57:3514:57:40 47024200000504673 B A 121.2 481 481 14:57:4014:57:45 47022900020675189 S A 121.25 481 481 14:57:4514:57:52 47024200000504675 B A 121.3 481 481 14:57:5214:57:57 47022800020702679 S A 121.35 481 406 14:57:5714:58:16 47022800020702679 S U 120.5 0 406 14:57:5714:58:30 47020100021289266 B A 120.55 481 481 14:58:3114:58:35 47024200000504676 S A 120.6 481 281 14:58:3514:58:41 47020100021289267 B A 120.65 481 481 14:58:4114:58:46 47020100021289268 S A 120.7 481 481 14:58:4714:58:51 47024100000498842 B A 120.75 481 481 14:58:5114:58:56 47024100000498843 S A 120.8 481 481 14:58:5714:59:05 47024200000504680 B A 120.85 481 481 14:59:05

Such pattern of placement of orders clearly indicates the intention to raise the price of the

scrip and creating artificial volume in the scrip.

FINDINGS RELATED TO THE NOTICEES

27. The following table depicts the trading volume of the Group along with the

structured/ synchronised trading by them vis-à-vis the total market trading in the scrip

of Vipul for the complete period of investigation i.e. May 21, 2008 to October 31,

2008:

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A B A+B (A+B)/(1,940,722x2) C D C+D (C+D)/(A+B)

Client name Purchase Sell

Gross (Purchase + sale)

Gross % of traded qty to total Market volume of 1,940,722

Structured/synchronised Purchase

Structured/synchronised Sell

Gross Structured/synchronised Purchase and sale

% of synchronised trading with other Group Members vis‐à‐vis total trades of client

AMIT AGRAWAL 109,634 109,676 219,310 5.65% 97,759 97,833 195,592 89.19%

ANJANI 197,641 197,641 395,282 10.18% 188,204 188,412 376,616 95.36%

GAURAV MANISH 18,798 18,798 37,596 0.97% 18,798 18,448 37,246 99.07%

MONIKA GUPTA 230,578 230,578 461,156 11.88% 215,326 213,715 429,041 93.04%NARESH GUPTA 368,532 368,522 737,054 18.99% 341,484 341,463 682,947 92.67%

NARESH KUMAR 106,999 106,999 213,998 5.51% 101,120 101,527 202,647 94.70%RAJEEV SETH 86,143 86,143 172,286 4.44% 83,239 83,996 167,235 97.07%Group Total 1,118,325 1,118,357 2,236,682 57.62% 1,045,930 1,045,394 2,091,324 93.52%

,

From the above table and other records available, I observe the following:-

a. During the complete period of investigation from May 21, 2008 to October 31,

2008, Noticee(s) have, in total, bought 1,118,325 shares and sold 1,118,357 shares

of Vipul, thus accounting for 57.61% of total market volume on gross basis.

Majority (93.52%) of the trades executed by the Noticee(s) are in the nature of

structured trades/ synchronised trades with the other members of the Group.

b. Noticee(s) were mainly active during the period May 21, 2008 to July 07, 2008.

During this period, they have, in total, bought 1,118,149 shares and sold

1,118,116 shares of Vipul, thus accounting for 86.50% of total market volume of

the period on gross basis. Thus, 99.98 % of the trading done by the Noticee(s)

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during the complete period of Investigation was during the period of May 21,

2008 to July 07, 2008.

c. Out of these, 1,045,930 shares (93.54 % of total purchases by Noticee) were

purchased and 1,045,394 shares (93.49 % of total sales by Noticee) were sold, for

the group by way of structured deals. This accounted for only 86.51% of total

market volume during the period May 21, 2008 to July 07, 2008, when all these

structured trades were executed and 53.88% of total market volume of the scrip

for the period May 21, 2008 to October 31, 2008, on gross basis.

d. It may also be noted that none of the structured/ synchronised trades executed by

the Noticee through any of the trading member had both the Noticee and the

counterparty (another member of the Group) trading through same trading

member.

e. Among the Noticee(s), Connected Client Naresh Gupta and Monika Gupta have

highest concentration of 18.99% and 11.88%to market volume on gross basis

during entire period of investigation.

f. Further, the percentage of synchronised trades of the Noticee(s) vis-à-vis their

total trades in the scrip during the period were in the range of 89.19% (Amit

Aggarwal) to 99.07% (Gaurav Manish). The high percentage of synchronised

trades indicate that the trading done by these clients was majorly with the

intention of manipulating the scrip and not genuine in nature.

28. The following table depicts the turnover of Noticee(s) along with the LTP variation

and profits made by him vis-à-vis the total market turnover in the scrip of Vipul:

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Client Name Purchase value (Rs.)

Sale value (Rs.) Gross (Rs.)

Profit or loss

Total contribution to price rise in Rs.

AMIT AGRAWAL

11,761,842.7 11,730,644.3 23,492,487.0 31,198.4 7.2

ANJANI 19,889,167.1 19,921,047.7 39,810,214.8 ‐31,880.6 12.8

GAURAV MANISH

2,023,007.2 2,019,026.1 4,042,033.3 3,981.1 1.4

MONIKA GUPTA

24,826,014.4 24,870,069.7 49,696,084.1 ‐44,055.3 17.2

NARESH GUPTA

40,757,765.6 40,707,067.9 81,464,833.5 50,697.7 26.3

NARESH KUMAR

11,284,742.8 11,282,232.2 22,566,975.1 2,510.6 7.6

RAJEEV SETH 6,788,445.7 6,797,419.2 13,585,864.9 ‐8,973.5 6.9

Total 117,330,985.5 117,327,507.1 234,658,492.7 3,478.40 79.40

From the above table and other records available, I observe the following:-

a. All the noticee(s) taken together have made a total profit of Rs. 3,478.40 by way

of its trading in the scrip of Vipul. The total value of the trading of the Noticee(s)

in Vipul is Rs. 234,658,492.7. Thus profit made by the Noticee(s) is negligible

compared to their total turnover in the scrip.

b. Among all the members of the Main Group/Noticee(s), the highest profit of Rs.

50,697/- is made by Naresh Gupta. On the other hand Monika Gupta, who is

connected to Naresh Gupta, incurred a loss of Rs. 44,055/-, which is also highest

loss among all the Noticee(s).

29. Naresh Gupta & Monika Gupta are connected / related to each other as they have

common mobile no viz. 9818001008. Further, as per submissions made by them

during personal hearing, Monika Gupta is the daughter in law of Naresh Gupta.

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30. The clients, Anjani, Gaurav Manish, Monica Gupta, Naresh Kumar, Rajeev Seth and

few other Group Members were introduced to the broker, Sam Global Securities Ltd.

by its NSE sub-broker Shree Balaji Investments Solutions, a partnership firm of Shri

Rajeev Gupta. Few other Group members were introduced to the broker Unicon

Securities Pvt. Ltd by Firstcall Consultancy Services Pvt. Ltd. Shri Rajeev Gupta is

husband of Monica Gupta and both are directors of Firstcall Consultancy Services.

31. Naresh Kumar was an employee of one of the brokers, Unicon Securities Pvt. Ltd.

and Anjani, one of the Noticee(s), was an employee of Shree Balaji Investments

Solutions.

32. Though no direct connection between Amit B Agarwal could be established with

other group entities, his trading pattern indicates their connivance with others in the

group.

33. While determining the quantum of penalty under sections 15HA, it is important to

consider the factors stipulated in section 15J of SEBI Act, which reads as under:-

"15J - Factors to be taken into account by the adjudicating officer While adjudging quantum of penalty under section 15-I, the adjudicating officer shall

have due regard to the following factors, namely:-

a. the amount of disproportionate gain or unfair advantage, wherever

quantifiable, made as a result of the default;

b. the amount of loss caused to an investor or group of investors as a result of

the default;

c. the repetitive nature of the default."

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In this regard, I have taken into consideration the following factors:

34. The percentage concentration of the total trades and synchronised trades, on gross

basis of the total market volume, of all the Noticee(s) are given below:

Name of the Noticee(s) Gross

concentration of total trades (%)

Gross concentration of Structured Trades (%)

NARESH GUPTA 18.99 17.60 MONIKA GUPTA 11.88 11.06 ANJANI 10.18 9.70 AMIT AGRAWAL 5.65 5.04 NARESH KUMAR 5.51 5.22 RAJEEV SETH 4.44 4.30 GAURAV MANISH 0.97 0.96 Total 57.62 53.88

From the above table, it is observed as follows:-

a. The contribution of the noticee(s) was around 57.62% of the total market volume

in the scrip, during the complete period of examination. Out of which, the

maximum individual contribution of 18.99% and 11.88% was by Naresh Gupta

and Monika Gupta, respectively, on gross basis.

b. The total synchronised/structured trades by the noticee(s) were 53.88% of the

total market volume of the scrip on the gross basis. Further, synchronised

/structured trades by Naresh Gupta and Monica Gupta have been 17.60% and

11.06%, respectively, of the total market volume during the period of

examination on gross basis.

c. Among the Noticee(s), apart from Naresh Gupta and Monika Gupta, only Anjani

has a concentration of greater than 10% of the total market volume on gross

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basis. The concentration of Synchronised/structured trades by Anjani is 9.70% of

the total market volume on gross basis.

35. Following table provide the total profit/loss made by the noticee(s) along with the

value of purchase and sales made by them in the scrip of Vipul during the period.

Client Name Purchase value

(Rs.)Sale value

(Rs.)Profit /

Loss

Total contribution to price rise in Rs.

NARESH GUPTA 40,757,765.60 40,707,067.90 50,697.70 26.3AMIT AGRAWAL 11,761,842.70 11,730,644.30 31,198.40 7.2GAURAV MANISH 2,023,007.20 2,019,026.10 3,981.10 1.4NARESH KUMAR 11,284,742.80 11,282,232.20 2,510.60 7.6RAJEEV SETH 6,788,445.70 6,797,419.20 ‐8,973.50 6.9

ANJANI 19,889,167.10 19,921,047.70 ‐31,880.60 12.8MONIKA GUPTA 24,826,014.40 24,870,069.70 ‐44,055.30 17.2

Total 117,330,985.50 117,327,507.10 3,478.40 79.4

From the above table, it is observed as follows:-

a. It is observed from the above table that, among the noticees, maximum profit of

Rs. 50,697 is made by Naresh Gupta. Amit Agrawal has made a profit of Rs.

31,198. Monika Gupta and Anjani Have suffered loss of Rs. 44,055 and Rs.

31,880, respectively. The total profit made by the group is Rs. 3,478.

b. As observed from the above table the total profit made by the Noticee(s) is not

much compared to total trading done by them in the scrip of Vipul. However, in

this case the total quantum of trading done in the scrip and percentage of

structured trades executed by the Noticee(s) is of greater importance than

profit/loss made for consideration to decide the quantum of penalty on each of

the client. As mentioned earlier that the trading by the Noticee(s) is around 54%

on Gross basis with Naresh Gupta, Monika Gupta and Anjani being the major

contributors.

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c. It is also observed form the above table that the Naresh Gupta Monika Gupta and

Anjani are also major contributors to price rise. Therefore, it is clear the role of

these three clients is most prominent among all the other noticee(s)

36. All the accounts of Naresh Gupta and Monika Gupta are looked after by Mr. Rajeev

Seth. The trading done on behalf of the accounts of Naresh Gupta and Monika Gupta

has been done by Rajeev Seth. Therefore, they were not aware of the activities being

conducted through their account. The same has been corroborated by Mr. Rajeev Seth

in the letter submitted by Naresh Gupta and Monika Gupta which is signed by Rajeev

Seth.

37. Considering the facts and circumstances of the case and the violations committed by

the noticees, I am of the view that imposing following penalties u/ s 15HA of Act

would commensurate with the violation of Regulation 4(1), 4(2) (a), (b), (e) and (g)

of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003:-

Name Amount of Penalty (in Rs.)

Naresh Gupta 50,000.00 Monika Gupta 40,000.00 Rajeev Seth 50,000.00 Anjani 25,000.00 Manish Gaurav 5,000.00 Naresh Kumar 15,000.00 Amit B Aggarwal 15,000.00

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ORDER

38. After taking into consideration all the facts and circumstances of the case and

material available on record, in exercise of the powers conferred upon me U/s 15-I(2)

and 15 HA of the SEBI Act, 1992 read with Rule 5 of Adjudication Rules, I hereby

impose the following monetary penalty on the Noticee(s):-

Name Amount of Penalty (in Rs.)

Naresh Gupta 50,000.00 Monika Gupta 40,000.00 Rajeev Seth 50,000.00 Anjani 25,000.00 Manish Gaurav 5,000.00 Naresh Kumar 15,000.00 Amit B Aggarwal 15,000.00

The above penalty amount shall be paid through a duly crossed demand draft drawn

in favour of “SEBI – Penalties Remittable to Government of India” and payable at

Mumbai, within 45 days of receipt of this order. The said demand draft should be

forwarded to Ms Medha Sonparote, Deputy General Manager, Investigation

Department-ID 1, Securities and Exchange Board of India, SEBI Bhavan, Plot No,

C4-A, “G” Block, Bandra Kurla Complex, Bandra(East), Mumbai-400 051

In terms of Rule 6 of the Rules, copies of this order are sent to the Noticee and also to

the Securities and Exchange Board of India.

Date: October 21, 2011 AVARJEET SINGH

Place: Mumbai ADJUTIATING OFFICER

before the adjudicating officer securities and …rajeev seth bwhps7455r naresh kumar aojpk6967p...

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