BEFORE THE ADJUDICATING OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA [ADJUDICATION ORDER NO. Order/MC/HP/2021-22/13539] 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) RULES, 1995. In respect of Laxmi Narain Kesarwani (PAN: AATPK2749R) having address at - No. 69, Vishakha Enclave, Pitam Pura, New Delhi 110088 In the matter of PMC Fincorp Limited BACKGROUND
1. Securities and Exchange Board of India (hereinafter be referred to as, 'SEBI') initiated adjudication proceedings under Section 15HA of the SEBI Act, 1992 (hereinafter referred to as, 'SEBI Act'), against Laxmi Narain Kesarwani (Noticee/You) for the alleged violations of Section 12A(a),(b),(c) of SEBI Act read with Regulation 3(a),(b),(c),(d) and Regulations 4(1), 4(2) (a), (e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as, 'PFUTP Regulations') pursuant to investigation in the scrip of PMC Fincorp Limited (PMC/Company/Scrip) for the period from March 29, 2012 to March 31, 2015 (IP/investigation period). Adjudication Order in the matter of PMC Fincorp Limited APPOINTMENT OF ADJUDICATING OFFICER
2. SEBI appointed the undersigned as Adjudicating Officer (hereinafter referred to as AO) under Section15-I of the SEBI Act read with Rule 3 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 (hereinafter be referred to as the 'Adjudication Rules'), vide order dated June 26, 2020 to inquire into and adjudge under section 15HA of the SEBI Act, the aforesaid alleged violations against the Noticee. The appointment of the AO was communicated vide order dated June 30, 2020. SHOW CAUSE NOTICE, REPLY AND HEARING
3. Show Cause Notice No. EAD5/MC/DPS/11978/2020 dated July 21, 2020 (hereinafter be referred to as, the SCN) was served upon the Noticee under Rule 4(1) of the Adjudication Rules read with Section 15-I of the SEBI Act, to show cause as to why an inquiry should not be held and penalty not be imposed against the Noticee under Section 15HA of SEBI Act for the aforesaid alleged violations of PFUTP Regulations.
4. The allegations levelled against the Noticee in the SCN are summarized as below:
5. PMC is registered as a Public Limited Company in the State of Uttar Pradesh, Kanpur. The company was incorporated on 4th February 1985, to undertake business of Financial Services. The company is registered with Reserve Bank of India as a Non-Banking Financial Company (NBFC) and engaged in activities including Corporate and Personal Finance, Debt Syndication, Private Placement, Arranger, Distribution & Marketing of Financial Products and Dealing & Investment in Stock Market. The company offered its shares in Indian Capital Market through an IPO in the year 1988. The shares of company were listed on UP Stock Exchange Ltd (UPSE) and subsequently got listed on Bombay Stock Adjudication Order in the matter of PMC Fincorp Limited Exchange Ltd (BSE) on March 12, 2012. As per the MCA website, Companys registered office is at B-10, VIP Colony, Civil Lines, Rampur, Uttar Pradesh.
6. The details of the management of the company during the investigation period are as follows:- Name Designation Date of Appointment Date of Cessation
1. Pramod Gupta Director 30-Apr-2010 Till date
2. Raj Kumar Modi Managing Director 27-Jan-2003 Till date
3. Rekha Modi Director 17-Dec-2009 Till date
4. Vishnu Bhagwan Aggarwal Director 30-Apr-2010 16-Dec-2018
5. Dhirendra Kumar Gupta Director 27-Jan-2003 16-Nov-2012
7. During IP, price of the scrip on BSE moved from Rs. 315 to Rs. 41.90 reaching a high of Rs. 880 and a low of Rs. 34.85. The closing market price of the scrip at BSE as on January 22, 2020 was Rs. 0.39. The IP was divided into 5 patches as given below: Period Duration Opening Price/ vol on 1st day of period(Rs.) Closing Price/ Vol on last day of period(Rs.) Low Price/Vol during the Period(Rs.) High Price/Vol during the Period(Rs.) Avg no of shares traded daily during the period Pre- Investig ation 13/03/2012 - 28/03/2012 (*) Price (in Rs.)
355 307.95 300.50 (28/03/2012) (16/03/2012) 56064 Volume 11275 109795 11275 (13/03/2012) 109795 (28/03/2012) Patch 1 29/03/2012- 06/02/2013 Price (in Rs.)
315 499.65 313.50 (29/03/2012) (28/01/2013) 40619 Volume 67975 59563 2810 (18/05/2012) 138987 (01/01/2013) Sub division of equity shares of the company in the ratio 1:2 w.e.f. 07/02/2013 Patch 2 07/02/2013 19/03/2013 Price (in Rs.)
244 103.15 101 (18/03/2013) (08/02/2013) 161854 Volume 32331 1505 12543 (20/02/2013) 468416 (14/03/2013) Patch 3 Price (in Rs.)
103 807.75 99.55 (20/03/2013) 848.90 (10/03/2014) 25353 Adjudication Order in the matter of PMC Fincorp Limited Period Duration Opening Price/ vol on 1st day of period(Rs.) Closing Price/ Vol on last day of period(Rs.) Low Price/Vol during the Period(Rs.) High Price/Vol during the Period(Rs.) Avg no of shares traded daily during the period 20/03/2013- 12/03/2014 Volume 453379 29393 1 (02/04/2013) 524490 (21/03/2013) Issue of bonus shares in the ratio 8:10 w.e.f. 13/03/2014 Patch 4 13/03/2014 - 21/10/2014 Price (in Rs.)
430 838.90 425 (13/03/2014) (11/06/2014) 28388 Volume 24266 25756 882 (30/06/2014) 186959 (26/03/2014) Sub division of equity shares of the company in the ratio 1:5 w.e.f. 22/10/2014 Patch 5 22/10/2014 - 31/03/2015 Price (in Rs.)
170 41.90 34.85 (02/02/2015) 244.70 (27/10/2014) 141716 Volume 110367 511983 765 (12/01/2015) 1064414 (30/03/2015) Post- Investig ation 01/04/2015 - 30/06/2015 Price (in Rs.) 41.05 6.48 5.93 (29/06/2015) (01/04/2015) 421830 Volume 899783 481419 14996 (12/06/2015) 2027173 (16/04/2015) *The scrip got listed on BSE on March 12, 2012
8. The price volume chart during the IP is as follows:-
9. The adjusted price volume chart after accounting for the stock splits during the IP is as under:- 200000 400000 600000 800000 1000000 1200000 No.of Shares Close Price Adjudication Order in the matter of PMC Fincorp Limited
10. Details of Top 10 buy broker and sell broker concentration on BSE during the IP are tabulated as follows: Buy Broker Name Total Buy Volume %age of Trd Selling Broker Name Total Volume %age of Trd Vol Integrated Master Securities Pvt.Ltd. 8041423 20.48 Integrated Master Securities Pvt.Ltd. 6039396 15.38 Fairwealth Securities Ltd. 3490327 8.89 Centillion Capital Private Limited (Formerly known as Pelf Finstock Limited) 3067620 7.81 Mindex Capital Market Private Limited (Formerly known as MKN Equity Brokers Pvt. Ltd.) 3115802 7.93 SS Corporate Securities Ltd. 2599724 6.62 Smc Global Securities Ltd. 2979274 7.59 Smc Global Securities Ltd. 1683228 4.29 India Infoline Ltd. 2416219 6.15 Ncj Share & Stock Brokers Ltd. 1616085 4.12 Kumar Share Brokers Limited 1893758 4.82 Kk Securities Ltd. 1468734 3.74 The Calcutta Stock Exchange Ltd. 1151112 2.93 Alankit Assignments Ltd. 1298675 3.31 Comfort Securities Ltd. 973631 2.48 Mindex Capital Market Private Limited (Formerly known as MKN Equity Brokers Pvt. Ltd.) 1265138 3.22 Sw Capital Pvt. Ltd. 892496 2.27 India Infoline Ltd. 1021616 2.60 Ase Capital Markets Ltd. 890429 2.27 Comfort Securities Ltd. 973631 2.48 Top 10 Buy Brokers 25844471 65.81 Top 10 Buy Brokers 21033847 53.56 Remaining Brokers 13429446 34.19 Remaining Brokers 18240070 46.44 Total Traded Volume 39273917 100 Total Traded Volume 39273917 100 200000 400000 600000 800000 1000000 1200000 1000 1500 2000 2500 3000 No.of Shares Close Price Adjudication Order in the matter of PMC Fincorp Limited
11. From the table above, it was observed that top 10 trading members contributed 65.81% of gross buy volume and contributed 53.56% of gross sell volume during
12. Details of top 10 buy clients and sell clients concentration on BSE during the IP are tabulated as below: Buy Client Name Total Buy Volume %age of Trd Vol Selling Client Name Total Volume %age of Trd Vol Seabird Vincon Private Limited 3150159 8.02 Raghav Bahl 3455444 8.80 Economy Suppliers Private Limited 2760019 7.03 Golden Chariot Recreations Pvt Ltd 1276156 3.25 Seabird Retails Private Limited 2606958 6.64 Mukesh Dhirajlal Mahetalia 677468 1.73 Seabird Distributors Private Limited 2555220 6.51 Seabird Vincon Private Limited 601402 1.53 Embassy Sales Private Limited 2349219 5.98 Anoop Jain 600000 1.53 Famous Investment Consultants Pvt Ltd 1622494 4.13 Embassy Sales Private Limited 549734 1.40 Shivdarshan Sales Private Limited 1485972 3.78 Godavari Corporation Private Limited 510515 1.30 Rolex Vinimay Private Limited 1440312 3.67 Anoop Jain HUF 453100 1.15 Sankatmochak Tieup Private Limited 772480 1.97 Kabira Bharat Kalabhai 445004 1.13 Mukesh Dhirajlal Mahetalia 686218 1.75 Veena Jain 430665 1.10 Top 10 Buy Clients 19429051 49.47 Top 10 Buy Clients 8999488 22.92 Remaining Clients 19844866 50.53 Remaining Clients 30947201 77.08 Total Traded Volume 39273917 100 Total Traded Volume 39273917 100
13. It was observed from above table that top 10 buy clients contributed 49.47% of gross buy volume and top 10 sell clients contributed 22.92% of gross sell volume during IP.
14. Based on UCC details by BSE/KYC details from brokers, off-market transfers, details from MCA website and bank account statements (those who contributed more than 5% to the market LTP) of top 10 buyers/sellers and LTP contributors and the off market transfers, a group of 92 entities were found to be connected to one another on the basis of fund transfers, off market transactions, common directors, same address etc. Connection of the Noticee is depicted below: Adjudication Order in the matter of PMC Fincorp Limited Entity Name Basis of connection Laxmi Narain Kesarwani (Noticee) Noticee share same address with Vivek Kesarwani Noticee and Vivek Kesarwani had fund transfer/s with Nishant Inbuild Ltd.
15. Trading by the Noticee during IP: Sr. No. Client Name Sum of Buy Qty. Sum of Sell Qty. Trade Gross Buy % to total buy volume Gross Sell % to total sell volume
1 Laxmi Narain Kesarwani (Noticee) 51400 153364 -101964 0.13 0.39
16. Patch 3 - Price Rise - 20/03/2013 to 12/03/2014:
17. During this period, the price of the scrip opened at Rs.103, reached a high of Rs.848.90 and closed at Rs.807.75 i.e., a rise of 684.22%. Buy LTP analysis of the 40 connected entities during this period is tabulated below Adjudication Order in the matter of PMC Fincorp Limited Sr. No. Buyer Name All trades LTP Diff. >0 LTP Diff. < 0 LTP Diff. =0 % of LTP to Total Market diff Sum of No of trades impact traded No of trades impact traded No of trades traded No of trades Seabird Vincon Pvt 152.05 495123 6486 382.05 37697 330 -230 32595 245 424831 5911 4.94 Famous Investment Consultants Pvt Ltd 114.70 223861 2575 215.35 15716 164 -100.65 4649 94 203496 2317 2.78 Economy Suppliers Pvt Ltd 107.25 393055 4558 342.35 30780 283 -235.10 22355 226 339920 4049 4.43
4 Nishant Inbuild Ltd 94.65 127180 1693 173.40 9180 110 -78.75 4153 89 113847 1494 2.24 Embassy Sales Private Limited 93.20 311330 4711 595.10 27272 309 -501.90 22282 283 261776 4119 7.69 Shivdarshan Sales Pvt Ltd 85.60 129836 1809 155.80 7990 126 -70.20 3526 62 118320 1621 2.01 Rolex Vinimay Pvt
82 162310 1924 149.25 10103 102 -67.25 5123 62 147084 1760 1.93 Seabird Distributors Pvt Ltd 65.35 317244 3764 220.05 22624 222 -154.70 23849 191 270771 3351 2.84 Seabird Retails Pvt 61.20 358503 4484 363.95 21772 277 -302.75 16016 257 320715 3950 4.70 Vimgi Investment Pvt Ltd
12 20000 213 19.45 975 12 -7.45 800 7 18225 194 0.25 Radhu Developers Pvt Ltd. 9.75 2002 12 15.75 2 2 -6 200 1 1800 9 0.20 Sunil Kumar Gupta
0 10000 5 0 0 0 0 0 0 10000 5 0
13 Darshana Devi 0 10000 17 0 0 0 0 0 0 10000 17 0
14 Mayank Aggarwal 0 3000 1 0 0 0 0 0 0 3000 1 0
15 Nimish Aggarwal 0 3000 1 0 0 0 0 0 0 3000 1 0
16 Nupur Aggarwal 0 3000 2 0 0 0 0 0 0 3000 2 0
17 Sakshi Aggarwal 0 3000 4 0 0 0 0 0 0 3000 4 0
18 Satish Singhal 0 15000 3 0 0 0 0 0 0 15000 3 0
19 Meena Singhal -0.05 10000 6 0 0 0 -0.05 4888 1 5112 5 0
20 Shankar Somani -0.15 25000 17 0.10 5250 2 -0.25 13885 4 5865 11 0
21 Aarzoo Aggarwal -0.25 3000 1 0 0 0 -0.25 3000 1 0 0 0 Himanshu Aggarwal -0.75 3000 4 0 0 0 -0.75 500 1 2500 3 0
23 Veena Jain -1.60 17036 128 6.10 688 6 -7.70 408 8 15940 114 0.08
24 Noticee -2.05 8000 77 7 530 5 -9.05 210 2 7260 70 0.09
25 Anju Gupta -2.75 56200 12 0 0 0 -2.75 36000 2 20200 10 0 Amitkumar Radheshyam Gupta -3.05 558 34 4 140 4 -7.05 23 3 395 27 0.05
27 Sunil Kumar Gupta -4.25 4700 2 0 0 0 -4.25 5 1 4695 1 0
28 K K Securities Ltd -6 3000 6 1.40 1000 2 -7.40 500 1 1500 3 0.02 Adjudication Order in the matter of PMC Fincorp Limited
29 Umesh Goyal HUF -6.20 850 22 0.30 20 1 -6.50 220 2 610 19 0 Mindex Capital Market Private Limited -7.15 14751 292 6.10 909 5 -13.25 593 12 13249 275 0.08
31 Ashu Goyal -7.45 5546 199 6.65 596 8 -14.10 240 13 4710 178 0.09
32 Vivek Kesarwani -9.80 8000 69 0.05 100 1 -9.85 270 2 7630 66 0
33 S K Aggarwal HUF -12.35 30255 406 19.35 754 11 -31.70 2125 31 27376 364 0.25 M K N Commodity Brokers Private Limited -13.40 38390 796 74.60 2873 52 -88 3559 68 31958 676 0.96
35 Nitin Aggarwal HUF -15.55 6888 77 14.50 301 6 -30.05 918 23 5669 48 0.19
36 Mudit Jain HUF -30.55 21500 200 21.80 440 7 -52.35 4805 15 16255 178 0.28 Prakash Ferrous Industries Private Limited -38.55 138161 607 28.15 6243 20 -66.70 20423 37 111495 550 0.36
38 K K Aggarwal HUF -49.45 23204 341 19.15 675 13 -68.60 1783 25 20746 303 0.25
39 M K Aggarwal HUF -57.80 37531 484 17.50 1010 13 -75.30 4598 49 31923 422 0.23 J M S Financial Services Ltd. -87.25 58957 1482 83.80 3137 65 -171.05 4446 119 51374 1298 1.08 Total of connected entities having Net +ve LTP contribution 877.75 2540444 32229 2632.50 184111 1937 -1754.75 135548 1517 2220785 28775 34.03 Total of connected entities 521.35 3101971 37524 2943.05 208777 2158 -2421.7 238947 1937 2654247 33429 38.02 Total of Mkt 704.75 6186257 62187 7735.85 397456 4203 -7031.10 464560 3885 5324241 54099 100
18. The connected entities contributed Rs. 2943.05 (38.02% of the market +ve LTP) to the market +ve LTP.
19. The connected entities listed at Sr. No. 1 to 11, having net +ve LTP contribution, contributed Rs. 2632.50 (34.03% of the market +ve LTP) to the market +ve LTP. It was also observed that the net LTP contribution by entities from Sr. No. 1 to 11 including Noticee was Rs. 877.75 whereas the net LTP contribution of the market was Rs. 704.75.
20. From trading analysis, it was observed that the following 34 entities had traded among themselves and the details are as follows Adjudication Order in the matter of PMC Fincorp Limited +LTP in Rs. Total +LTP in Buyer Nisha Inbuil d Ltd Vimgi Invest ment Pvt Ltd. Famous Investme Consulta nts Pvt Ltd. Econo Supplie rs Pvt Ltd. Embas Sales Ltd. Radh Devel opers Ltd. Rolex Vinim Privat Limite Seabir Retail s Pvt Ltd. Seabir Vinco n Pvt Ltd. Seab Distri butor s Pvt Ltd. Shiv dars Sale s Pvt Seller Mindex Capital Market Private Limited - - 0.05 0.05 - - - - - 1 - 1.10 J M S Financial Services Ltd. 9.55 - 2.35 18.75 26.65 - - 18.40 19.55 13.30 20.25 128.80
3 K K Securities Ltd - - - - - - 0.05 - - - - 0.05
4 Nishant Inbuild Ltd - - - 6.50 0.50 - - - - - - 7 Centillion Capital Private Limited 2.25 - 13.40 1.15 4.65 - 6.30 8.55 11.80 4.15 4.45 56.70
6 S K Aggarwal HUF 7.20 - - - 6.05 - - 5.80 2.10 0.10 4.30 25.55 Famous Investment Consultants Pvt Ltd - - - - 3.05 - - 13.05 - 0.05 - 16.15 SS Corporate Securities Limited - 1.70 0.85 - 2.25 - 0.65 - - 0.05 23.70 29.20 Economy Suppliers Private Limited 1.60 - 2 1.10 5.30 - 1 4.75 6.80 2.70 - 25.25 Embassy Sales Pvt Ltd 1 - 2.30 - - 3 - 4.50 5.35 0.50 2 18.65 Accolade Holdings Private Limited - - - - 1 - - - - - - 1 Golden Chariot Recreations Pvt Ltd - - - 0.05 0.05 - - 0.25 - 0.10 - 0.45 Parnami Capital Services Limited - - - 0.05 - - - - - - - 0.05 Radhu Developers Pvt Ltd. - 8 3 - - - - 2 - - - 13 Parveen Aggarwal HUF - - - - - - - 0.20 - - - 0.20 Prakash Ferrous Industries Pvt Ltd - - 2.80 9.75 17.40 - 9.80 18.05 14.05 9.15 1.60 82.60 Rolex Vinimay Pvt Ltd - - - - 18.20 - - 3.20 - - - 21.40 M K N Commodity Brokers Pvt Ltd 8.15 - 0.05 19.05 24.80 - 4 25.80 22.45 10.65 5.75 120.70
19 Nitin Aggarwal HUF - - - - - - 11.90 - - - 2 13.90
20 K K Aggarwal HUF 0.45 - 3.35 2.90 1.05 - 2.65 - 3.90 - 0.25 14.55
21 Mudit Jain HUF - - 7.70 - - - - 18.05 - - - 25.75 Adjudication Order in the matter of PMC Fincorp Limited
22 M K Aggarwal HUF 0.65 - 2 4.10 0.55 - 4.25 2.30 3.90 2.95 0.40 21.10 Sanjay Bansal & Sons HUF - - - - - - - 1 3.50 - - 4.50
24 Raghav Bahl - - 9.50 3.55 2.10 - 9.55 5.25 7.40 3.05 0.05 40.45 Seabird Retails Pvt Ltd 6 - 1 2.55 17.90 - - 5.15 4.25 1.15 - 38 Seabird Vincon Pvt Ltd 0.10 - - 5.05 8.05 - - 3.55 7 4.95 0.05 28.75 Seabird Distributors Private Limited - - - 5.15 8.90 - - 4.55 5.85 0.05 - 24.50
28 Savita Aggarwal - - - - - - - - - - 0.05 0.05
29 Santosh Aggarwal - - - - - - - 1 - 1 - 2 Shivdarshan Sales Private Limited - - - - 1 - - - - - - 1
31 Noticee - - - - - - - - - 0.05 - 0.05 Dilip Kumar Agarwal - - - - - - - - 1 - - 1
33 Ashu Goyal 8.70 - - 0.45 - - - 1 1.50 0.85 0.30 12.80 TOTAL 45.65 9.70 50.35 80.20 149.45 3 50.15 146.40 120.40 55.80 65.15 776.25
21. From the table above, it was observed that Noticee along with other 33 entities traded among themselves and contributed Rs. 776.25 (633 trades) to the market +ve LTP, which is 10.58% of the market +ve LTP.
22. Entities at Sr. No. 1 to 33 (sellers) namely Mindex, J M S, KK Securities, Nishant, Centillion, S K Aggarwal HUF, Famous, SS Corporate, Economy, Embassy, Accolade, Golden, Parnami, Radhu, Parveen, Prakash, Rolex, M K N, Nitin Aggarwal HUF, K K Aggarwal HUF, Mudit Jain HUF, M K Aggarwal HUF, Sanjay, Raghav, Seabird Retails, Seabird Vincon, Seabird Distributors, Savita, Santosh, Shivdarshan, Noticee, Dilip and Ashu Goyal, were alleged to have aided 11 connected entities (buyers) namely Nishant, Vimgi, Famous, Economy, Embassy, Radhu, Rolex, Seabird Retails, Seabird Vincon, Seabird Distributors and Shivdarshan, by selling shares to increase the price of the scrip.
23. Also, aforesaid 11 connected entities (buyers), having net +ve LTP contribution, contributed Rs. 2632.50 (34.03% of the market +ve LTP) to the market +ve LTP. Adjudication Order in the matter of PMC Fincorp Limited
24. In view of the significant +ve LTP contribution of the entities by trading among themselves it was alleged that the Noticee, along with the aforesaid 33 entities created misleading appearance of trading and manipulated the price of the scrip by contributing to the price rise and have violated Section 12 A(a),(b),(c) of SEBI Act read with Regulation 3(a),(b),(c),(d) and Regulation 4(1), 4(2) (a), (e) of PFUTP Regulations.
25. Patch 4 - Price Rise - 13/03/2014 to 21/10/2014:
26. During this period, the price of the scrip opened at Rs.430, reached a high of Rs.880 and closed at Rs.838.90 i.e., a rise of 95.09%. Buy LTP analysis of the
20 connected entities during this period is tabulated below Buyer Name All trades LTP Diff. >0 LTP Diff. < 0 LTP Diff. =0 % of +ve LTP to Total Market +ve LTP Sum of LTP diff Sum of No of trades impact traded No of trades impact traded No of trades traded No of trades
1 Rolex Vinimay Pvt Ltd 345.55 722974 8640 541.05 70902 334 -195.50 22240 161 629832 8145 8.99 Famous Investment Consultants Private Limited 208.05 820428 7532 487.95 80842 355 -279.90 30200 233 709386 6944 8.11
3 Shivdarshan Sales Pvt Ltd 122.80 782113 7655 566.55 61989 351 -443.75 42024 267 678100 7037 9.42
4 Economy Suppliers Pvt Ltd 37.10 194174 2272 209.20 19282 108 -172.10 6146 95 168746 2069 3.48
5 Nisha Amitkumar Gupta 37.05 130 22 37.05 44 4 0 0 0 86 18 0.62
6 Seabird Vincon Pvt Ltd 14.85 169912 1578 148.75 18164 106 -133.90 7067 75 144681 1397 2.47 Embassy Sales Private Limited
12 155060 2484 271.20 11978 138 -259.20 5858 132 137224 2214 4.51
8 Vivek Kesarwani 5.85 29420 162 6.50 1427 4 -0.65 300 2 27693 156 0.11
9 Noticee 5.45 43400 241 5.45 2757 13 0 0 0 40643 228 0.09
10 Nitin Aggarwal HUF 3.55 4000 53 3.60 523 6 -0.05 125 1 3352 46 0.06
11 S K Aggarwal HUF 0 1500 15 0 0 0 0 0 0 1500 15 0
12 M K Aggarwal HUF 0 2104 17 0.05 140 1 -0.05 10 1 1954 15 0
13 Ashu Goyal 0 400 13 0 0 0 0 0 0 400 13 0 M K N Commodity Brokers Private Limited -0.05 963 35 1 3 1 -1.05 60 2 900 32 0.02 Amitkumar Radheshyam Gupta -3 56 17 2 12 1 -5 4 1 40 15 0.03 Mindex Capital Market Private Limited -10 1150 7 0.05 50 1 -10.05 500 2 600 4 0 J M S Financial Services Ltd. -11.65 6152 178 15.15 200 11 -26.80 445 8 5507 159 0.25 Adjudication Order in the matter of PMC Fincorp Limited
18 Seabird Distributors Pvt Ltd -29.90 290895 2442 148.80 22069 148 -178.70 9420 122 259406 2172 2.47
19 Seabird Retails Pvt Ltd -142 254687 2062 155.40 21597 136 -297.40 13779 143 219311 1783 2.58
20 Nishant Inbuild Ltd -174.95 166251 1026 187.75 23435 97 -362.70 14900 173 127916 756 3.12 Total of connected entities having Net +ve LTP contribution 792.25 2921611 30639 2277.30 267908 1419 -1485.05 113960 966 2539743 28254 37.85 Total of connected entities 420.70 3645769 36451 2787.50 335414 1815 -2366.80 153078 1418 3157277 33218 46.33 Total of Mkt 408.90 4173061 44330 6016.60 389754 2815 -5607.70 190800 2167 3592507 39348 100
27. The connected entities contributed Rs. 2787.50 (46.33% of the market +ve LTP) to the market +ve LTP.
28. The connected entities listed at Sr. No. 1 to 10 including Noticee, having net +ve LTP contribution, contributed Rs. 2277.30 (37.85% of the market +ve LTP) to the market +ve LTP. It was also observed that the net LTP contribution by entities from Sr. No. 1 to 10 was Rs. 792.25 whereas the net LTP contribution of the market was Rs. 408.90.
29. From trading analysis, it was observed that the following 33 entities had traded among themselves and the details are as follows - +LTP in Rs. Total +LTP in Rs. Buyer Famou Invest ment Consu ltants Pvt Ltd Econom Supplie Private Limited Embassy Sales Private Limited Rolex Vinimay Private Limited Seabir Vinco Privat Limite Shivda rshan Sales Private Limite Notice Nisha Amitk umar Gupta Seller J M S Financial Services Ltd. 28 - 7.05 23 4 29.85 - - 91.90
2 Nishant Inbuild Ltd 7 2.10 22 9.50 - 17.25 - - 57.85 Prabudh Securities Private Limited 1 - - - - - - - 1 Vimgi Investment Private Limited. - - 4 0.05 - 1 - - 5.05
5 S K Aggarwal HUF - - 0.05 - 1 - - 1.05 Famous Investment Consultants Pvt Ltd - - 10.25 1 0.30 - - - 11.55 Adjudication Order in the matter of PMC Fincorp Limited SS Corporate Securities Limited 0.05 - - - - 4.05 0.25 - 4.35 Economy Suppliers Private Limited 1.05 - 5 6 - 0.15 - - 12.20 Embassy Sales Pvt Ltd 9 3.50 - 0.50 3 16.85 - - 32.85 Gulshan Investment Company Limited 0.10 2 - 2.10 0.05 2.10 - - 6.35 Parnami Capital Services Limited - - 0.05 2.05 - 1.10 - - 3.20 Rolex Vinimay Pvt Ltd - 4.50 - - - 5.50 - - 10 M K N Commodity Brokers Pvt Ltd 9.20 1.05 6.95 1.20 - 22.95 - 20.10 61.45
14 M K Aggarwal HUF - 3.75 - - - 10 - - 13.75
15 Raghav Bahl 54.70 13.30 9.95 90.20 8.60 73.40 - - 250.15 Seabird Retails Pvt Ltd 4.05 6.75 0.50 8 - 16.50 0.15 - 35.95 Seabird Vincon Pvt Ltd - - 5.50 - 17.45 12.95 - - 35.90 Seabird Distributors Private Limited 2.30 - - - - 5 - - 7.30 Shivdarshan Sales Private Limited - - - 5 4.25 2.95 - - 12.20
20 Shankar Somani 0.20 - - 1.30 - 1.30 0.10 - 2.90
21 Meena Singhal 0.10 0.10 - 10.05 0.10 0.20 - - 10.55
22 Anju Dewan - - 0.05 1.05 - 3.15 - - 4.25
23 Aman Dewan 0.35 - - - - - - 0.35
24 Ritu Kapur 0.35 0.10 - 0.50 - 1.05 - - 2
25 Mayank Aggarwal - - - 1 - - - - 1
26 Himanshu Aggarwal 0.10 - - - - - - - 0.10
27 Nupur Aggarwal - - - - - 1.25 - - 1.25
28 Sakshi Aggarwal - - - 3.50 - - - - 3.50
29 Ashu Goyal - - 3.90 - - - - - 3.90
30 Satish Singhal 1.10 - 0.10 - - - - - 1.20
31 Veena Jain - - - - - 0.55 - - 0.55 Total 118.65 37.15 75.30 166.05 37.75 230.10 0.50 20.10 685.60
30. From the table above, it was observed that Noticee along with 32 entities traded among themselves and contributed Rs. 685.60 (455 trades) to the market +ve LTP, which is 11.40% of the market +ve LTP.
31. Entities at Sr. No. 1 to 31 (sellers) namely, J M S, Nishant, Prabudh, Vimgi, S K Aggarwal HUF, Famous, SS Corporate, Economy, Embassy, Gulshan, Parnami, Adjudication Order in the matter of PMC Fincorp Limited Rolex, M K N, M K Aggarwal HUF, Raghav, Seabird Retails, Seabird Vincon, Seabird Distributors, Shivdarshan, Shankar, Meena, Anju, Aman, Ritu, Mayank, Himanshu, Nupur, Sakshi, Ashu Goyal, Satish and Veena, allegedly aided other eight entities (buyers) namely Famous, Economy, Embassy, Rolex, Seabird Vincon, Shivdarshan, Noticee and Nisha, by selling shares to increase the price of the scrip.
32. Also, eight entities (buyers) namely, Famous, Economy, Embassy, Rolex, Seabird Vincon, Shivdarshan, Noticee, Nisha having net +ve LTP contribution, contributed Rs. 2267.20 (37.68% of the market +ve LTP) to the market +ve LTP.
33. In view of the significant +ve LTP contribution of the entities by trading among themselves it was alleged that Noticee, along with the aforesaid 32 entities created misleading appearance of trading and manipulated the price of the scrip by contributing to the price rise and thereby violated Section 12A(a),(b),(c) of SEBI Act read with Regulation 3(a),(b),(c),(d) and Regulation 4(1), 4(2) (a), (e) of PFUTP Regulations.
34. The aforesaid alleged violations, if established, make the Noticee liable for monetary penalty under Section 15HA of the SEBI Act.
35. SCN was duly served to the Noticee. Noticee filed the reply to the SCN on October 30, 2020.
36. The key submissions of the Noticee are summarised below:
a) Noticee submitted that he is only an investor who has invested in certain scrips in the market, based on the advice of his brokers, namely Integrated Master Securities (P) Ltd. (IMSPL) and Master Capital Services Ltd. (MCSL).
b) The investment in PMC has been completely managed by IMSPL only, who has duly issued contract notes for the trades. All the transactions were Adjudication Order in the matter of PMC Fincorp Limited carried out On market through IMSPL. He has not interfered with the prices of PMC in any manner whatsoever. He also does not have any knowledge about the seller(s) or buyer(s) of the scrips.
c) Other scrips traded by him yielded comparable profit or loss in similar trades. Some scrips have resulted in Gross Loss percentage as high as 377.27%. Some of the scrips resulted in comparable Gross Profit percentage/ huge Gross Loss percentage. Some of the scrips invested through IMSPL in Patch
3 and Patch 4 have resulted in a Gross Profit percentage close to the 24.33%.
d) Noticee further submitted that profits earned from all trades in the scrip of PMC along with other scrips have been duly offered to tax as Short Term Capital Gain in the ITRs for AYs 2014-15, 2015-16 and 2016-17. There were no Long Term Capital Gains from any of the trades in the scrip of PMC.
e) The investment has been made only for the purpose of earning profits and not for manipulating any scrip/aiding any other party in such manipulation as alleged in the SCN.
f) With respect to the references made in the SCN, Noticee submitted that he does not have any knowledge about either Seabird Distributors (P) Ltd. or Seabird Retails (P) Ltd.
g) Further, the 43,400 PMC shares purchased in Patch 4 were sold in Patch 5 at much lower prices due to the sub-division of the shares in the ratio of 1:5. Each of the 2,17,000 shares (43400 x5) was completely sold in Patch 5 and in the post-investigation period. There were Gross Losses in many of the sale transactions as well due to the reduced price.
h) Noticee stated that the shares of PMC being traded On market, and there being no knowledge of the buyer(s)/seller(s) of the scrip or of the promoters of PMC, any manipulation in the scrip price cannot be attributed to him in any manner whatsoever. The transactions in the scrip of PMC was also done in identical manner as other scrips, and there has been similar profitability and also huge losses in some of the scrips as traded through IMSPL. Adjudication Order in the matter of PMC Fincorp Limited
i) The offences as alleged in the SCN are committed if a person is directly or indirectly engages in an action/employs a manipulative device/indulges in a fraudulent or unfair trade practice with respect to trading in a security in the securities market. There should be an engagement in such action by the person. Merely trading in a particular scrip as an investor in normal course of business does not amount to committing an offence under the provisions as alleged in the SCN.
37. Opportunity of hearing was provided to the Noticee through video conferencing and Authorized Representative (AR), Mr. S. Krishnan, attended the hearing on behalf of the Noticee on August 18, 2021. AR of the Noticee reiterated the submissions made in reply dated October 30, 2020.
38. As the inquiry in the matter has been completed, I now proceed to decide the case on the basis of SCN issued, replies made by the Noticee and material available on record. CONSIDERATION OF ISSUES AND FINDINGS
39. The issues that arise for consideration in the instant matter are: Issue No. I Whether Noticee is in violation of Section 12A(a),(b),(c) of SEBI Act read with Regulation 3(a),(b),(c),(d) and Regulations 4(1), 4(2) (a), (e) of PFUTP Regulations? Issue No. II If yes, whether the failure, on the part of the Noticee would attract monetary penalty under Section 15HA of the SEBI Act? Issue No. III If yes, what would be the monetary penalty that can be imposed upon the Noticee taking into consideration the factors stipulated in Section 15J of the SEBI Act read with Rule 5(2) of the Adjudication Rules? Adjudication Order in the matter of PMC Fincorp Limited Issue No. I Whether Noticee is in violation of Section 12A(a),(b),(c) of SEBI Act read with Regulation 3(a),(b),(c),(d) and Regulations 4(1), 4(2) (a), (e) of PFUTP Regulations as alleged in the SCN?
40. The allegations against the Noticee in the SCN are based upon his LTP contribution in Patch 3 and 4 and his connections with other entities on account of fund transfers. The allegations in the SCN against the Noticee are as follows:
a) In Patch-3, when the price of the scrip opened at Rs.103, reached a high of Rs.848.90 and closed at Rs.807.75, Noticee along with other 32 entities (sellers) are alleged to have aided the 11 positive LTP contributing buyers, by selling shares to them to allegedly manipulating the price of the scrip.
b) In Patch-4, when the price of the scrip opened at Rs.430, reached a high of Rs.880 and closed at Rs.838.90, Noticee along with other 9 entities were positive LTP contributing buyers in the scrip. In view of the positive LTP contribution by trading among themselves, Noticee along with the other 32 entities are alleged to have created misleading appearance of trading and manipulated the price of the scrip by contributing to the price rise.
41. On examination of the trades of the Noticee in price rise patches during IP, I find that Noticee appeared on both buy and sell side in Patch 3 and on buy side in Patch 4. Consequently, I have examined the net LTP contribution of the trades by the Noticee and find the following:
42. Patch 3 - Price Rise - 20/03/2013 to 12/03/2014:
43. In Patch-3, Noticee purchased 8,000 shares and sold 8,000 shares. Buy trade of Noticee contributed to negative LTP and sell trade contributed to positive LTP during this period. Adjudication Order in the matter of PMC Fincorp Limited Name Trade Quantity Traded LTP Rate Laxmi Narain Kesarwani (Noticee) Buy 8000 -2.05 Sell 8000 0.05
44. The trading pattern of Noticee indicates that out of total 8,000 shares sold in Patch 3, only 1 trade matched with allegedly connected counterparty for a total
260 shares caused a positive LTP of Rs. 0.05. The net LTP contribution by the Noticee in this patch was Rs.2.0.
45. The allegation against the Noticee is based on positive LTP contribution caused by 1 trade of the Noticee on February 17, 2014. The impugned trade is sale of
260 shares to Seabird Distributors at Rs.680. Noticee denied any connection with Seabird Distributors.
46. Considering the total price increase during this period of Rs.704.75 (from Rs.103 to Rs.807.75), I find that a contribution of Rs.0.05 to positive LTP through 1 trade is very insignificant. I also note that net LTP contribution by the Noticee is negative in this patch. Patch 4 - Price Rise - 13/03/2014 to 21/10/2014:
47. In Patch-4, Noticee purchased 43,400 shares through 241 trades. Buy trade of Noticee contributed to positive LTP during this period. Name Trade Quantity Traded LTP Rate Laxmi Narain Kesarwani (Noticee) Buy 43400 5.45
48. The trading pattern of Noticee indicates that out of total 43,400 shares bought in Patch 4, only 3 trades matched with allegedly connected counterparty for a total 1388 shares caused a positive LTP of Rs. 0.5. Adjudication Order in the matter of PMC Fincorp Limited
49. While the Noticee carried out 241 trades during this period, the allegation against the Noticee is based on positive LTP contribution caused by 3 trades of the Noticee on two trading days with the counterparties viz. Seabird Retails, SS Corporate Securities Limited and Shankar Somani. Considering the total price increase during this period of Rs.408.90 (from Rs.430 to Rs.838.90), I find that a contribution of Rs.0.5 to positive LTP through 3 trades is very insignificant. I also note that Noticee carried out 241 trades and allegation is made only in respect of
3 trades, without considering the trading of the Noticee with several other counterparties during the same period.
50. Noticee denied any connection with Seabird Distributors or Seabird Retails. The SCN alleged connection based on the fact that Noticee shares same address with Vivek Kesarwani and that Noticee and Vivek Kesarwani had fund transfer/s with Nishant Inbuild Ltd. While fund transfers may point to a connection, by itself the connection does not implicate the Noticee in the absence of any significant price impact of the Noticees trades. I also take note of the Noticees submission that he has invested in certain other scrips in the market apart from PMC, based on the advice of his brokers.
51. I also take note of Noticee submission that profits earned from all trades in the scrip of PMC along with other scrips have been duly offered to tax as Short Term Capital Gain, and there were no Long Term Capital Gains from any of the trades in the scrip of PMC. Noticee has sold 145364 shares during October 27, 2014 to December 15, 2014 i.e. during Patch 5, however, there are no allegations against the Noticee for his trading in Patch 5 of the investigation period.
52. In view of the above and insignificant LTP contribution by Noticee in price rise periods, his trading pattern in PMC as well as in other scrips during the same period, I find that the allegation of manipulating the price of the scrip by contributing to the price rise by the Noticee is not established. Adjudication Order in the matter of PMC Fincorp Limited
53. In view of the above, I find that the allegation levelled against Noticee regarding violation of Section 12A(a),(b),(c) of SEBI Act read with Regulation 3(a),(b),(c),(d) and Regulation 4(1), 4(2) (a), (e) of PFUTP Regulations does not stand established.
54. As the violations alleged against the Noticee are not established, issues II and III do not merit consideration. ORDER
55. In view of the findings noted in the preceding paragraphs, the adjudication proceedings initiated against the Noticee i.e. Laxmi Narain Kesarwani vide SCN dated July 21, 2020 are disposed of.
56. Copy of this Adjudication Order is being sent to the Noticee and also to SEBI in terms of Rule 6 of the Adjudication Rules. DATE: September 28, 2021 PLACE: MUMBAI MANINDER CHEEMA ADJUDICATING OFFICER