BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO.EAD-5/SVKM/RGA/AO/ 21 /2015-16]
_______________________________________________
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE
BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF SEBI
(PROCEDURE FOR HOLDING INQUIRY AND IMPOSING
PENALTIES BY ADJUDICATING OFFICER) RULES, 1995
In respect of
Vinod Shares Ltd.
SEBI Registration No. INE261273633
PAN No. AACCV2843G
In the matter of M/s Maharashtra Polybutenes Limited

FACTS
1. Securities and Exchange Board of India (hereinafter referred to
as SEBI) conducted investigation into the alleged irregularities
in the trading in the shares of Maharashtra Polybutenes Ltd.
(hereinafter referred to as 'MPL') from February, 2009 to July,
2009 (hereinafter referred to as relevant period) and into the
possible violation of the provisions of the Securities and
Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 1 of 17

Exchange Board of India Act, 1992 (hereinafter referred to as

'SEBI Act, 1992') and Regulations made thereunder. It was
observed that during the relevant period, MPL had incurred
losses till the financial year 2006-07 and made meagre profit of `
2.87 crore and ` 2.91 crore for the financial years 2007-08 and
2008-09 respectively. MPL shares were

infrequently traded

before the relevant period. A total of 53,51,932 shares were

traded and the price increased from ` 53.35 to ` 79.95 an
increase of 49.85% during the relevant period.

2. It was observed that Vinod Shares Ltd. (hereinafter referred to as

'Noticee') had executed self trades in its proprietary trading
account during the relevant period. It was alleged that the
Noticee's trades in MPL were irregular and had violated section
12A(a), (b) and (c) of SEBI Act, 1992, regulations 3(a), (b), (c),
(d), 4(1) and 4(2) (a), (e) and (g) of SEBI (Prohibition of
Fraudulent and Unfair Trade Practices Relating to Securities
Market) Regulations, 2003, ('PFUTP Regulations, 2003') and
clause A of the Code of Conduct prescribed in Schedule II of the
Broker Regulations, 1992 read with regulation 7 of SEBI (Stock
Brokers and sub-brokers) Regulations, 1992 (hereinafter referred
to as 'Broker Regulations, 1992'.

APPOINTMENT OF ADJUDICATING OFFICER

3. Vide order dated July 22, 2013, appointed Shri Piyoosh Gupta as
the Adjudicating Officer. Consequent to the transfer of Shri
Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 2 of 17

Piyoosh Gupta, Shri A. Sunil Kumar was appointed as

Adjudicating Officer vide order dated November 08, 2013.
Pursuant to the transfer of Shri A. Sunil Kumar, the undersigned
has been appointed as Adjudicating Officer vide order dated June
22, 2015 to inquire and adjudge under sections 15A(a) of the
SEBI Act, 1992 the violations specified in the SCN.

SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

4. Show Cause Notice no. ASK/RGA/25500/2014 dated August 28,
2014 (hereinafter referred to as 'SCN') was issued to the noticee
in terms of Rule 4 of SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules, 1995 read with
section 15I of SEBI Act, 1992 to show cause as to why an inquiry
should not be initiated and penalty be not imposed under section
15HA and 15HB of SEBI Act, 1992 for the violations specified in
the SCN. Noticee vide letter dated September 17, 2014 filed its
reply to the SCN. Vide notice dated January 02, 2015, an
opportunity of personal hearing was granted to the Noticee on
January 28, 2015. Vide letter dated January 16, 2015 Noticee
filed its reply wherein Noticee specifically stated that ".....no
useful purpose may serve by attending the hearing in person on
January 28, 2015 ...". Further, subsequent to the transfer of
erstwhile Adjudicating Officer, another opportunity of hearing was
provided to the Noticee on July 02, 2015 vide notice dated June
22, 2015. The notice was delivered to and acknowledged by the
Noticee. However, the Noticee did not appear for the hearing.
The salient points of submissions of the Noticee vide its letter
dated September 17, 2014 and January 16, 2015 are as under:
Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 3 of 17

MPL had recovered from losses and started earning profit,

had selected the scrip as our research team spotted the
security wherein there was a possibility of earning profit.

Trading carried out in proprietary account

Nowhere associated with promoters/any other directors

and thus there was no interest in creating a market of the
scrip. We were not holding any shares of MPL.

Have not placed any order above 3000 shares in one go

and subsequently when we found that the ultimate
objective of earning profit from trading activity was not
getting materialized, then we had stopped trading within a
short span of time.

We have not done any fraud in the market. We have not

participated in price movement as we quickly squared up
our position at the earliest opportunity.

We have exercised due care and skill and no malpractices

have been adopted by us.

5. In view of the aforesaid, ample opportunities have been given to

the Noticee to defend his case. As per Rule 4(7) of the Rules, if
any person fails, neglects or refuses to appear as required by
sub-rule (3) before the Adjudicating Officer, he may proceed with
the inquiry in the absence of such person after recording the
reasons therefor. Despite having been given ample opportunities,
the Noticee has failed to avail of the opportunity of personal
Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 4 of 17

hearing. I am, therefore, proceeding with the matter based on

documents on record.

CONSIDERATION OF ISSUES AND FINDINGS

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

a. Whether Noticee violated the provisions of section 12A(a), (b)

and (c) of SEBI Act, 1992, regulations 3(a), (b), (c), (d), 4(1) and
4(2) (a), (e) and (g) of PFUTP Regulations, 2003?
b. Whether Noticee violated the provisions of regulation 7 of
Broker Regulations, 1992 read with clause A of the Code of
Conduct prescribed in Schedule II of the Broker Regulations,
1992?
c. Does the violation, if any, attract monetary penalty under
section 15HA and 15HB of SEBI Act, 1992?
d. If so, what would be the monetary penalty that can be imposed
taking into consideration the factors mentioned in section 15J of
SEBI Act, 1992?

7. It would be appropriate here to refer to the aforesaid provisions of

the SEBI Act, 1992, PFUTP Regulations, 2003 and Broker
Regulations, 1992 which reads as under:
SEBI Act, 1992
Section 12
Prohibition of manipulative and deceptive devices, insider trading and
substantial acquisition of securities or control.
12A. No person shall directly or indirectly

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 5 of 17

(a) use or employ, in connection with the issue, purchase or sale of any
securities listed or proposed to be listed on a recognized stock exchange, any
manipulative or deceptive device or contrivance in contravention of the
provisions of this Act or the rules or the regulations made thereunder;
(b) employ any device, scheme or artifice to defraud in connection with issue
or dealing in securities which are listed or proposed to be listed on a
recognised stock exchange;
(c) engage in any act, practice, course of business which operates or would
operate as fraud or deceit upon any person, in connection with the issue,
dealing in securities which are listed or proposed to be listed on a recognised
stock exchange, in contravention of the provisions of this Act or the rules or the
regulations made thereunder;

PFUTP Regulations, 2003

Regulation 3
Prohibition of certain dealings in securities
No person shall directly or indirectly
(a) buy, sell or otherwise deal in securities in a fraudulent manner;
(b) use or employ, in connection with issue, purchase or sale of any security
listed or proposed to be listed in a recognized stock exchange, any manipulative
or deceptive device or contrivance in contravention of the provisions of the Act
or the rules or the regulations made there under;
(c) employ any device, scheme or artifice to defraud in connection with dealing
in or issue of securities which are listed or proposed to be listed on a
recognized stock exchange;
(d) engage in any act, practice, course of business which operates or would
operate as fraud or deceit upon any person in connection with any dealing in or
issue of securities which are listed or proposed to be listed on a recognized
stock exchange in contravention of the provisions of the Act or the rules and the
regulations made there under.
Regulation 4
4. Prohibition of manipulative, fraudulent and unfair trade practices

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 6 of 17

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

in a fraudulent or an unfair trade practice in securities.
(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;
(e) any act or omission amounting to manipulation of the price of a security;
(g) entering into a transaction in securities without intention of performing it or
without intention of change of ownership of such security;
SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992
Regulation 7: Stock-Brokers to abide by Code of Conduct.
The stock-broker holding a certificate shall at all times abide by the
Code of Conduct as specified at Schedule II.
Schedule II: Clause A:
(1) INTEGRITY: A stock-broker, shall maintain high standards of
integrity, promptitude and fairness in the conduct of all his business.
(2) EXERCISE OF DUE SKILL AND CARE: A stock-broker, shall
act with due skill, care and diligence in the conduct of all his
business.
(3) MANIPULATION: A stock-broker shall not indulge in
manipulative, fraudulent or deceptive transactions or schemes or
spread rumours with a view to distorting market equilibrium or
making personal gains.
(4) MALPRACTICES: A stock-broker shall not create false market either singly
or in concert with others or indulge in any act detrimental to the investors
interest or which leads to interference with the fair and smooth functioning of
the market. A stock-broker shall not involve himself in excessive speculative
business in the market beyond reasonable levels not commensurate with his
financial soundness. (5) Compliance with statutory requirements: A stockbroker shall abide by all the provisions of the Act and the rules, regulations
issued by the Government, the Board and the Stock Exchange from time to time
as may be applicable to him.

8. From the material available on record, it is observed that the

Noticee had executed self trades for the quantity of 50,601
shares on 51 instances during 14 days. The Noticee had
executed self trades without the intention of change of
ownership of MPL shares, created artificial volume and created

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 7 of 17

false or misleading appearance in the securities market.

details of such self trades are as under:

Trade
Rate

LTP

Trade
Qty

VINOD
SHARES
LIMITED

47.10

-3.00

1000

Time
Diff in
putting
buy and
sell
order
00:00:10

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

50.10

3.00

401

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

50.10

0.10

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

49.10

27-February-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

27-February-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

27-February-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

27-February-2009

VINOD
SHARES
LTD

27-February-2009

Buy
Client
Name

Sell
Client
Name

Buy
Member
Name

Sell
Member
Name

27-February-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

27-February-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

27-February-2009

VINOD
SHARES
LTD

27-February-2009

The

Order
Rate

CP
Order
Rate

Buy
Term
No

Sell
Term
No

47.10

47.10

3153001

3153001

00:00:05

50.10

50.10

3153001

3153001

80

00:00:09

50.10

50.10

3153001

3153001

2.00

500

00:00:04

49.10

49.10

3153001

3153001

50.00

0.90

19

00:01:26

50.00

50.10

3153001

3153001

VINOD
SHARES
LIMITED

47.00

-0.30

400

00:00:06

47.00

47.00

3153001

3153001

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

47.00

0.00

100

00:00:30

47.00

47.00

3153001

3153001

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

50.00

3.00

500

00:00:06

50.00

50.00

3153001

3153001

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

46.70

-1.00

500

00:00:06

46.70

46.70

3153001

3153001

27-February-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

49.70

3.00

500

00:00:05

49.70

49.70

3153001

3153001

18-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

47.10

-1.65

1000

00:00:06

47.10

47.10

3153001

3153001

18-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

49.00

1.90

1300

00:00:11

49.00

49.00

3153001

3153001

18-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

47.20

-1.80

500

00:00:05

47.20

47.20

3153001

3153001

Trade Date

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 8 of 17

18-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

48.50

1.30

500

00:00:05

48.50

48.50

3153001

3153001

18-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

47.10

-0.10

300

00:00:06

47.10

47.10

3153001

3153001

18-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

47.25

-1.75

200

00:00:28

47.25

47.25

3153001

3153001

25-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

51.60

-2.30

500

00:00:04

51.60

51.60

3153001

3153001

25-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

53.80

2.20

500

00:00:07

53.80

53.80

3153001

3153001

25-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

51.70

-2.10

500

00:00:05

51.70

51.70

3153001

3153001

25-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

53.90

0.10

300

00:00:03

53.90

53.90

3153001

3153001

25-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

53.90

0.00

00:00:51

53.90

53.90

3153001

3153001

26-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

50.80

-2.00

4000

00:00:05

50.80

50.80

3153001

3153001

26-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

52.90

2.10

4000

00:00:04

52.90

52.90

3153001

3153001

26-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

51.00

-1.90

400

00:00:03

51.00

51.00

3153001

3153001

26-March-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

52.00

1.00

400

00:00:04

52.00

52.00

3153001

3153001

24-April-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

51.00

0.50

1000

00:00:02

51.00

51.00

3153001

3153001

24-April-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

52.00

1.00

1600

00:00:03

52.00

52.00

3153001

3153001

24-April-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

51.00

-1.00

600

00:00:08

51.00

51.00

3153001

3153001

27-April-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

51.00

-1.20

2000

00:00:07

51.00

51.00

3153001

3153001

27-April-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

52.00

1.00

2000

00:00:06

52.00

52.00

3153001

3153001

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 9 of 17

28-April-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

49.00

-2.00

2000

00:00:04

49.00

49.00

3153001

3153001

28-April-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

52.00

3.00

2000

00:00:04

52.00

52.00

3153001

3153001

20-May-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

58.50

-0.50

250

00:00:14

58.50

58.50

3153001

3153001

20-May-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

61.50

3.00

750

00:00:05

61.50

61.50

3153001

3153001

20-May-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

58.50

-3.00

500

00:00:11

58.50

58.50

3153001

3153001

22-May-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

72.50

0.45

500

00:00:07

72.50

72.50

3153001

3153001

22-May-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

73.50

1.00

500

00:00:08

73.50

73.50

3153001

3153001

27-May-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

71.80

-0.20

1000

00:00:06

71.80

71.80

3153001

3153001

27-May-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

69.80

-2.00

3000

00:00:09

69.80

69.80

3153001

3153001

27-May-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

71.80

2.00

2000

00:00:07

71.80

71.80

3153001

3153001

11-June-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

77.10

0.10

500

00:00:09

77.10

77.10

3153001

3153001

11-June-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

78.80

1.70

500

00:00:07

78.80

78.80

3153001

3153001

27-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

74.20

0.00

1000

00:00:04

74.20

74.20

3153001

3153001

27-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

76.70

2.50

1000

00:00:06

76.70

76.70

3153001

3153001

30-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

78.05

-1.95

2500

00:00:06

78.05

78.05

3153001

3153001

30-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

79.95

1.90

2500

00:00:03

79.95

79.95

3153001

3153001

30-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

79.90

-0.05

250

00:00:03

79.90

79.90

3153001

3153001

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 10 of 17

30-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

78.90

-1.00

25

00:00:04

78.90

78.90

3153001

3153001

30-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

78.90

0.00

225

00:00:05

78.90

78.90

3153001

3153001

31-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

79.10

0.10

2000

00:00:02

79.10

79.10

3153001

3153001

31-July-2009

VINOD
SHARES
LTD

VINOD
SHARES
LTD

VINOD
SHARES
LIMITED

VINOD
SHARES
LIMITED

80.10

1.00

2000

00:00:01

80.10

80.10

3153001

3153001

9. From the above, I find that Noticee executed self trades during
the relevant period spread over a period of 14 days. On perusal
of the above self trades, it is also seen that on a number of
instances, Noticee has placed buy orders at a new high price
than the LTP when shares were available at lower prices and
changed the course of the prices.

10. At this juncture, I would like to quote the Orders of the Hon'ble
Securities Appellate Tribunal (SAT) with respect to 'self trades'
wherein it was held as follows :

i.

Chirag Tanna Vs The Adjudicating Officer Appeal No. 26

of 2011 on June 16, 2011
Self trades have been defined by the Honble SAT as
"...trades in which both the buyer and the seller are the same
entity."

Further in the same order, Honble SAT also held that:

..we have on record the trade and order logs from which it has
been pointed out by the learned counsel for the respondent
Board that the appellant had executed self trades i.e. trades in
which he was both the buyer and the seller. Such trades are,
Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

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admittedly, fictitious and create artificial volumes in the traded

scrip..

ii.

Order dated 23.4.2012 in Appeal no. 21 of 2012 Systematix Shares & Stocks (India) Limited vs. SEBI :
". It has been held in several cases by this Tribunal that self
trades are fictitious and reprehensible. Trades, where beneficial
ownership is not transferred, are admittedly manipulative in nature.
.."

iii.

Order dated 03.12.2012 in Appeal No. 211 of 2012 - Anita

Dalal vs. SEBI :
"..... The appellant has been found guilty of self trade as well. Self
trades admittedly are illegal. This Tribunal has held in several cases
that self trades call for punitive action since they are illegal in
nature. In M/s. Jayantilal Khandwala & Sons Pvt. Ltd. vs. Securities
and Exchange Board of India (Appeal no. 24 of 2011 decided on
June 8, 2011) this Tribunal has held that one cannot buy and sell
shares from himself. Such transactions are obviously fictitious and
meant only to create false volumes on the trading screen of the
exchange."

11. From the above cited orders of the Hon'ble SAT, I also note that a) Self Trades are trades where beneficial ownership is not
transferred;
b) Self trades are fictitious and reprehensible;
c) Trades where beneficial ownership is not transferred, are
manipulative in nature;
d) Self trades create artificial volume in the market;

12. Further, the similar findings were made by the Hon'ble Securities
Appellate Tribunal in the case of Krupa Soni & Ors. v/s SEBI
Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

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(Appeal No. 32/2013) decided on January 09, 2014 holding thatOn perusal of pleadings and hearing the oral submissions, we note that
the self trades are fictitious in nature as there is no transfer of actual
beneficial ownership of share and because the buyer and seller are the
same person. Such trades are injurious to a healthy market and result
in the creation of artificial volumes in the scrip. This in turn gives a
totally wrong signal to the members of the public who may invest in the
hope of making some gains but ultimately land up with losses".

13. I find that Noticee in its reply has not submitted anything with
regard to self trades. Noticee has admittedly done proprietary
trading. In its submissions, the Noticee has stated that it has
traded in the scrip of MPL with the objective of earning profit.
However, when the Noticee realized that the ultimate objective of
earning profit from trading activity was not getting materialized,
then it stopped trading within a short span of time. It is noted from
the aforesaid table, that Noticee has traded throughout the
relevant period from February 2009 to July 2009. Thus,

the

contention of the Noticee that it traded for a short span of time is

devoid of merit. Further, it is also noted that in most of the
instances, where the Noticee was both a buyer and seller,
Noticee has put the counter order within a span of less than 10
seconds. The conduct of the Noticee makes it clear that the
objective of the Noticee was to create artificial volume and
manipulate the price

in the scrip of MPL. In a number of

instances where the shares were available at a lower price, the

Noticee had placed buy orders at a higher price which is unusual
and not explained.

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

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14. Noticee as a registered intermediary was under an obligation to

maintain high standards of integrity, exercise due skill and care,
not indulge in manipulation and malpractices. In the instant case,
Noticee has itself executed self trades. In this context, it is
pertinent to mention the judgment of Honble Supreme Court in
the matter of Chander Kanta Bansal vs. Rajinder Singh Anand
[(2008) 5 SCC 117] wherein Hon'ble SC has discussed the
concept of due diligence and observed that due diligence meant
reasonable diligence; . such diligence as a prudent man would
exercise in the conduct of his own affairs.

15. In my opinion, a registered intermediary such as the noticee

should have appropriate systems to ensure that unfair market
practices like self trades / fictitious trades in such high volumes
should not take place from its own terminals. It may also be
added that the activities that are prohibited should not be
executed. The same has also been emphasized by the Hon'ble
SAT in the case of H J Securities Pvt. Ltd. vs. SEBI (Appeal
No. 76/2012) decided on May 11, 2012. As a stock broker, the
Noticee has a duty to preserve the integrity and equilibrium of the
securities market.

16. Thus, the self trades executed by Noticee on numerous

instances has created artificial volume and prices in the scrip
resulting in false and misleading appearance of trading in the
scrip and also manipulated the price of the scrip and thereby
violated the provisions of section 12A(a), (b) and (c) of SEBI Act,
1992, regulations 3(a), (b), (c), (d), 4(1) and 4(2) (a), (e) and (g)

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

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of PFUTP Regulations, 2003 and regulation 7 of SEBI Broker

Regulations, 1992 read with clause A of the Code of Conduct
prescribed in Schedule II of the Broker Regulations, 1992.
17. In this context, reliance is placed upon the order of the Honble
Supreme Court of India in the matter of Chairman, SEBI v..
Shriram Mutual Fund {[2006] 5 SCC 361} wherein it was held
that "In our view, the penalty is attracted as soon as contravention of
the statutory obligations as contemplated by the Act is established and,
therefore, the intention of the parties committing such violation
becomes immaterial. . Hence, we are of the view that once the
contravention is established, then the penalty has to follow and only the
quantum of penalty is discretionary."

18. Thus, the aforesaid violations by the Noticee make it liable for
penalty under Section 15HA and 15HB of SEBI Act, 1992 which
read as follows:
Penalty for fraudulent and unfair trade practices
15HA. 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.

"Penalty for contravention where no separate penalty

has been provided
15HB. Whoever fails to comply with any provision of this
Act, the rules or the regulations made or directions issued

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

Page 15 of 17

by the Board thereunder for which no separate penalty has

been provided, shall be liable to a penalty which shall not
be less than one lakh rupees but which may extend to one
crore rupees."

19. It is noted that the disproportionate gain or unfair advantage

made by the Noticee or loss caused to the investors as a result of
default of this nature is not available on record. Noticee had
executed the self trades in an irregular manner over a period of
14 days on 51 instances. The nature of default can be termed as
repetitive in nature.

ORDER

20. After taking into consideration the facts and circumstances of the
case, nature and gravity of the charges and the factors
mentioned in section 15J of the SEBI Act, 1992 I, in exercise of
the powers conferred upon me under Section 15I of the SEBI
Act, 1992 read with Rule 5 of the Adjudication Rules, I hereby
impose following monetary penalty on the Noticee:
Penalty Amount
Violation
` 21,00,000/- (Rupees Under Section 15HA of SEBI Act, 1992 for
violation of section 12A(a), (b) and (c) of
Twenty One Lakh Only)
SEBI Act, 1992, Regulations 3(a), (b), (c),
(d), 4(1) and 4(2) (a), (e) and (g) of PFUTP
Regulations, 2003
` 11,00,000/- (Rupees Under Section 15HB of SEBI Act, 1992 for
violation of Clause A of the Code of
Eleven Lakh Only)
Conduct for Stock Brokers as specified
under Schedule II read with Regulation 7
of the Broker Regulations, 1992
Total
` 32,00,000/- (Rupees Thirty Two Lakh Only)

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

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21. I am of the view that the penalty imposed is commensurate with

the violations committed by the Noticee. The Noticee shall pay
the said amount of penalty by way of demand draft in favour of
SEBI - Penalties Remittable to Government of India, payable at
Mumbai, within 45 days of receipt of this order. The said demand
draft should be forwarded to The Division Chief, Enforcement
Department-EFD-DRA-III, SEBI Bhavan, Plot No. C 4 A, G
Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051.

22. 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: SEPTEMBER 14, 2015

PLACE: MUMBAI

S.V. KRISHNAMOHAN
CHIEF GENERAL MANAGER
&ADJUDICATING OFFICER

Adjudication Order in respect of Vinod Shares Ltd. in the matter of Maharashtra Polybutenes Ltd.
September 14, 2015

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