Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

Under Sections 11(1), 11(4), 11B of the Securities and Exchange Board of India Act, 1992

In respect of: Noticee No. Name of the Noticees PAN 1 Crosseas Capital Services Pvt. Ltd. AACCC5470H

In the matter of Wockhardt Limited

1. The present proceedings emanate from a Show Cause Notice dated September 05, 2022 (hereinafter referred to as “SCN”) issued by the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) against four entities including Crosseas Capital Services Pvt. Ltd., (hereinafter referred to as “the Noticee”), the Noticee herein, in the matter of Wockhardt Limited (hereinafter also referred to as (“the Company”/ “Wockhardt”). Vide the said SCN, inter alia, the Noticee was called upon to show cause as to why suitable directions under Sections 11B and 11(4) read with 11(1) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”) should not be issued against it for the alleged violation of Regulations 3 (a),(b),(c) and (d), 4 (1), 4 (2) (a) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations, 2003”) and Clause A(3) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of SEBI (Stock Brokers) Regulations, 1992.

2. The SCN qua the Noticee herein states as under: “……………

I. Allegation of Self Trades against Crossseas Capital Services Limited (Noticee no. 4) 2.1 Self-trades are the trades in which both the buyer and the seller are the same entity which create artificial/fictitious volume in the market and give a false and misleading appearance of trading in the scrip at the exchange.

2.2 It was observed during the investigation that Crossseas Capital Services Ltd has entered into self-trades on BSE and NSE on several occasions in its proprietary account. Extract of trade log of the self - trades executed by Noticee no. 4 is enclosed as Annexure 8. It is also observed the broker on buy side and sell side was same i.e., Crossseas Capital Services Ltd as detailed under:

No of Total % Of Self Broker On Total days on Self Traded Sr. Both Buy Self which Exchange Entity Name Trade Qty. To No. & Sell Trade self- Volu Market Side Count trades me Vol. done Crosseas Crosseas 1 NSE Capital Capital 145475 13829 233 0.21 Services Ltd Services Ltd BSE Crosseas Crosseas 2 Capital Capital 258476 22199 246 0.87 Services Ltd Services Ltd

2.3 In view of the above, it is alleged that Crosseas Capital Services Ltd., by carrying out self - trades repeatedly in its own account) created artificial volume in the scrip, leading to false and misleading appearance in the securities market and ii) indulged in manipulative, fraudulent or deceptive transactions distorting market equilibrium and thereby, violated Regulations 3 (a),(b),(c) and (d), 4 (1), 4 (2) (a) and (g) of SEBI(PFUTP) Regulations, 2003 and Clause A(3) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992..”

3. SCN was served upon the Noticee through speed post as well as through email. Subsequently, the Noticee vide reply dated September 29, 2022, the Noticee made submissions and requested for inspection of documents. Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

Inspection of documents was provided to the Noticee on November 14, 2022. During the inspection, the authorized representative of the Noticee submitted that all the documents sought for inspection were not provided and therefore, the Noticee reserves its right to seek further documents under inspection and make submissions within reasonable time frame. Thereafter, no further request of inspection of documents was received from the Noticee. I further note that the Noticee did not specify in the proceedings of inspection of documents dated November 14, 2022 or in any correspondence thereafter, as to which documents were not supplied during the inspection. The matter was placed before me on December 27, 2022 for granting an opportunity personal hearing. An opportunity of personal hearing was granted to the Noticee on January 17, 2023. On the day of hearing, the Authorized Representative of the Noticee appeared through WebEx and made submissions and the hearing was concluded on the said date.

4. Vide reply dated September 29, 2022, the Noticee submitted as follows:

“We, Crosseas Capital Services Limited (hereinafter referred to as "Noticee /We"), Noticee No.4 to the Show Cause Notice bearing number EFD1/ DRA4/ AA/ RK/ OW/ P/4696.1 /1/2022 dated September 5, 2022 (hereinafter referred to as "SCN") are in receipt of the said SCN by which it has been alleged that we have violated regulations 3 (a), (b), (c) and (d), 4(1), 4 (2) (a) and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations") and Clause A (3) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992.

1. At the outset, we deny each and every allegation made against us in the said SCN. Nothing stated in the said SCN shall be deemed to be admitted by us merely on account of non-traverse, unless the same is specifically admitted in this reply. It is further stated that all the contentions in this reply are without prejudice to each other. In addition to this, we reserve the right to make amendments to these submissions and to make further submissions in the matter as and when necessary. Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

2. We would submit that Inspection of all documents relevant for determination of relevant issues needs to be granted at this stage. The Noticee submits that in order to file an appropriate reply, the Noticee requires certain documents in inspection. Not providing these crucial and critical documents which are replied upon and relevant to the present proceeding, would be denying the Noticee of the principles of Natural Justice. It is imperative that your Honour provides the Noticee with all documents which will enable the Noticee to determine the issues (both procedural and substantive) arising out of the said SCN.

3. We submit that SEBI's letter no. SEBI/ PQ CELL/13132/2017 dated June 8, 2017, addressed to Ms. Shalini Mahajan, Assistant Director, Department of Economic Affairs on the subject of "VIP reference from Shri Gajendra Singh Shekhawat, MP, on self-trades" was in reply to DEA's letter no.F.No.15/3/SM / 2016 dated May 5, 2017 and was signed by Mr. Naveen Kumar, Assistant Manager, SEBI. Paragraph 2 of the letter records that intention is a sine quo non for establishing manipulation in case of self-trades and that accidental/ unintentional self-trades are not covered under SEBI (PFUTP) Regulations. The letter states that mere occurrence of self-trades is not per se illegal in the absence of any other additional evidence to prove manipulation or intent to defraud. (Copy of the SEBI's letter dated June 08, 2017 is enclosed as 'Annexure A')

It is requested that such "any other additional evidence" that SEBI may have (other than occurrence of self-trade) may kindly be provided to us.

4. Further, we draw your Honor’s attention to SEBI’s letter no EFD/MISC/OW/7371/1/2018 dated March 08, 2018, addressed to Ms. Alka Taneja, Department of Economic Affairs, on the subject of Self Trade Practice in India. Para 2(c) of the letter states: “It may kindly be noted that as per 1/1e provisions of SEBI (PFUTP) Regulations, 2003, intention is a sine quo non for establishing manipulation in case of self-trades and accidental/unintentional self-trades are not covered under the said regulations. Hence, mere occurrence of self-trades is not per se illegal in absence of any other additional evidence. Therefore, in all matters of Self Trade, an assessment has to be made regarding whether the said trade was intentional or unintentional on the basis of supporting evidence and the manipulation caused by indulging in self-trades should be clearly brought out." It is requested that such "any other additional evidence" or "supporting evidence", including clear evidence of nature of "manipulation" if any, may kindly be provided to us in inspection.

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

5. Your Honor's attention is drawn to Order of AO dated July 20, 2018 in the matter of Inventure Growth and Securities Ltd, where the show cause notice was disposed of in our favor (AO Order no. EAD-7/BJD/ BKM/95/2018-19) "The facts and circumstances as brought out hereinabove do not indicate any manipulative or fraudulent intent on the part of the Noticee while entering into the alleged self-trades. There is no material to indicate employment of any device or scheme or artifice by the Noticee to defraud or induce any person to trade in the scrip or to indulge in market manipulation. The allegations are also not supported on the basis of legitimately expected preponderance of probability".

It is requested that if there is "any material to indicate employment of any device or scheme or artifice by the Noticee to defraud or induce any person to trade in the scrip or to indulge in market manipulation" in the present matter, the same may kindly be provided to us in Inspection.

6. We will clearly demonstrate our genuine case at this stage itself in the following paras. However, if your Honor chooses not to exonerate us at this stage itself, then we seek inspection of following material/ documents: - a) Copy of list of self-trades which occurred in the scrip of Wockhardt Ltd. by all brokers (Whether from the same terminal or otherwise) during the investigation period b) Documents justifying the rationale of selection of this time period as Investigation period. c) Copy of self-trades which occurred in all scrips/ contracts and in all market segments (Including F&O/ Currency) by different brokers during the investigation period. d) Copy of reasons recorded by the Board, Chairman, member or the Executive Director that there are reasonable grounds to investigate the affairs of the company in the scrip of Wock hardt Ltd. (Your Honor’s attention is drawn to recent order of Hon'ble Delhi High Court dated July 09, 2018 in the matter of Amit Jain (W.P. (C) 8394/2014), where the SCN for alleged violation of SEBI (PIT) Regulations, 1992 was struck down on the procedural grounds alone). e) Copy of the complaint (if any) based on which the investigation was initiated by SEBI in trading in the scrip of Wockhardt Ltd.

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

f) Copy of the documents/evidence indicating that the self-trade executed by us was done with intent/evidence. g) File nothings recording approval for issuing below mentioned SEBI letters- A. SEBI’s letter no. EFD/ MISC/OW/ 7371/1/ 2018 dated March 08, 2018, addressed to Ms. Alka Taneja, Department of Economic Affairs, on the subject of Self Trade Practice in India. B. SEBI's letter no. SEBI/ PQ CELL/13132/ 2017 dated June 8, 2017, addressed to Ms. Shalini Mahajan, Assistant Director, Department of Economic Affairs, on the subject of "VIP reference from Shri Gajendra Singh Shekhawnt, MP, on self-trades".

h) Copy of File Noting’s approving the above SEBI letters dated March 08, 2018 and June 08, 2017. i) File noting’s dealing with letter of Shri Gajendra Singh Shekhawat, Member of Parliament (Lok Sabha) to SEBI on the issue of self-trades. (Letter no.MP/JU/2016/ 4426 da ted July 10, 201 6). j) Reply by SEBI to the aforesaid letter. k) File nothings dealing with such reply. (If any) l) Copy of File Nothings approving SEBI's letter no. ISD/ RC/ PP/ OW/12001/1/2016 dated April 26, 2016 on the subject "Self-Trades by Stock Brokers" addressed to Shri Neeraj Kumar, Assistant Director, and Department of Economic. (It may be noted that the copy of the letter was provided by SEBI to us under inspection in a different matter). m) Copy of file nothings approving SEBI's letter no. ISD/RC/PP/ OW/P/19846/2016 dated July 13, 2016 on the subject "VIP reference from Shri Hemant Tukaram Godse, MP regarding inconsistencies in SEBI's action against stock brokers for violation of SEBI (PFTUP) Regulations, 2003 pertaining to Self-Trades" addressed to Ms. Shalini Mahajan, Assistant Director, Department of Economic Affairs. (The copy of the letter was provided by SEBI to us under inspection in a different matter) n) Order log of all our trades on BSE as well as NSE for the relevant period in this scrip and in all other scrips traded by us in the same period. o) Certified copies of minutes of meeting of SEBI with ANMI held on October 26, 2016 to discuss the matter of self-trade. p) File nothings dealing with the representation made by ANMI on the issue of ‘Self -trades dated October 26, 2016.

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

q) File nothings dealing with letter dated October 13, 2017 by Association of National Exchanges Member of India addressed to SEBI on the subject, "All proceeding with respect to Self-trade matters may be put on hold till SEBI’s review process is complete". r) Copy of agenda and minutes of Meetings of the Secondary Market Advisory Committee ("SMAC") held between January 1, 2014 – March, 2014 dealing with self-trades. s) Copy of correspondence with exchanges on the issue of self-trade prevention by exchanges for the last two years. t) Copy of correspondence indicating action initiated against the exchanges for failing to prevent self-trades or for approving algorithms that resulted in self-trades. u) Copy of communication Between Investigation Department, Integrated Surveillance Department and Market Regulation Department in this matter. v) Copies of all the documents/ material to support the allegations made in the Show Cause Notice, including: A. Alleged self – trades are violating the provisions of Regulation 4(2) (g) of the PFUTP Regulations. B. Alleged self – trades was carried out without the intention of change of beneficial ownership of such shares. w) Copy of the Investigation Reports and minutes of CIDC meeting.

7. From the above, it is clear that that it has been decided at the Apex level of SEBI that- a. In order to punish self-trades additional evidence is required, (in addition to occurrence of self-trades in any volume), to prove that the same is intentional. b. Accidental or unintentional self-trades are not covered under the SEBI (PFUTP) Regulations, 2003 and therefore not punishable.

Preliminary Submissions: -

8. In the present case, the self - trades were purely unintentional/ accidental. Further, the volume of such unintentional/accidental self-trades executed by us was only approximately 0.41% of total combined market volume of Wock hardt Ltd. on both the exchanges i.e. NSE and BSE. In order to understand the calculation of the total percentage of self – trades, kindly refer to the below mentioned table:

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

Sr. No Volume of Self Trades Total Market % of Self Trades to (A) Volume (B) total Market (A/B)

1 1,45,475 6,92,73,810 0.21% NSE (as stated in para (as stated in para 2.19 of 2.19 of SCN dated SCN dated September 5, September 5, 2022) 2022)

2 2,58,476 2,97,09,885 0.87% BSE (as stated in para 2.19 of (as stated in para SCN da ted September 5, 2.19 of SCN dated 2022) September 5, 2022) Total 4,03,951 9,89,83,695 0.408% (BSE+NSE}

9. Your attention is drawn to Adjudication order dated November 02, 2017 in the matter of Sun gold Capital Limited wherein THE SELF-TRADES OF THE NOTICEE WERE 1.75% OF THE MARKET VOLUME AND THE ADJUDICATING OFFICER DISPOSED OF THE SHOW CAUSE NOTICE IN FAVOUR OF THE NOTICEE ON THE GROUNDS THAT UN- INTENTIONAL SELF TRADES THAT CONSTITUTED ONLY 1.75% OF MARKET VOLUME. This order has been accepted by the SEBI Board and no review u/s 15 (I) (3) has been carried out by the board and neither is possible anymore due to expiry of limitation period.

10. We state that Show Cause Notices/ proceedings in many similar matters have been disposed of on the basis of the Board’s Enforcement Action Policy no. EFD-DRA-3/0N/ 332/ 2017 dated May 16, 2017. Below are some of the instances-

Sr. Date of Scrip Noticees % of Adjudicatio Observation/ No` the Order self- n Officer Findings trade of total market volume

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

1. June 19, Unitech 1.Genuine Shri The order states 2017 Limited Stocks Brokers Nagendra that “There is no Pvt Ltd a Parakh evidence… to 2.Transglobal suggest any Securities Ltd fraudulent 3.OPG intention behind Securities Pvt execution of self- Ltd 4. Ambit trades by the Securities Noticee. The Broking Private volume of self- Limited 5.BLB trade is less than Limited 6.Total 1% of the total Securities LTD volume in share of 7.Nissar Unitech Ltd. Brothers Therefore, in 8.Kaushik Shah compliance of Shares & SEBI policy, I am Securities Pvt inclined to drop Ltd. and the adjudication Prashant Patel proceedings initiated against the notice vide SCN dated April 21, 2017.”

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

2. June 22, Aster Crosseas 0.55% Shri. The order states 2017 Silicates Capital Services Nagendra that “There is no Limited Pvt. Ltd Parakh evidence… to suggest any fraudulent intention behind execution of self-trades by the Noticee. The volume of self-trade is less than 1% of the total volume in share of Aster Silicates Ltd. Therefore, in compliance of SEBI policy, I am inclined to drop the adjudication proceedings initiated against the Noticee vide SCN dated May 06, 2015.”

Septemb Multi 1.Crosseas Crosse Ms. The AO has relied 3. er 29, Commodity Capital Services as Rachna on the above order 2017 Exchange Private Limited Capital Anand dated June 22, of India Ltd 2.Marwadi Service 2017. Further Share and s - disposed of the Finance Ltd. 0.16% said matter on the 3.Adroit basis of SEBI’s Financial policy dated May Services Pvt 15, 2017. The AO Ltd. stated that the 4.Genuine Stock present case Brokers Private bears similarities Limited 5.Pace to the aforesaid stock Broking order/ case dated Private Limited June 22, 2017. In 1.CPR Capital fact, in the present Services Limited case, such 2.Millennium percentage of self- Stock Broking trades is Private limited comparatively 3.Indus Portfolio less. After the Private limited perusal of 4.BP Equities investigation private Limited report and taking 5.BP Equities into account Private Limited miniscule volume of self-trades as Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

compared to the total market volume during the investigation period, the AO stated that no such malafide intention/motive could be established in the present case. 4. Septemb Apollo 1.Crosseas Crosse Ms. The AO has relied er 29, Tyres Capital Services as Rachna on the above order 2017 limited Private Limited Capital Anand dated June 22, 2. Marwadi Service 2017. Further Share and s - disposed of the Finance Ltd. 0.16% said matter on the 3.Adroit basis of SEBI’s Financial policy dated May Services Pvt 15, 2017. The AO Ltd. stated that the 4.Genuine Stock present case Brokers Private bears similarities Limited 5.Pace to the aforesaid stock Broking order/ case dated Private Limited June 22, 2017. In 6.CPR Capital fact, in the present Services Limited case, such 7.Millennium percentage of self- Stock Broking trades is Private limited comparatively 8.Indus Portfolio less. After the Private limited perusal of 9.BP Equities investigation private Limited report and taking 10.BP Equities into account Private Limited miniscule volume of self-trades as compared to the total market volume during the investigation period, the AO stated that no such malafide intention/motive could be established in the present case.

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

5. Septemb United 1.Crosseas 1. Ms. The AO has er 29, Spirits Ltd Capital Services 0.03% Rachna disposed of the 2017 Private Limited 2. Anand matter on the 2.Pace Stock 0.006% basis of SEBI’s Broking 3. EAP dated May Services Limited 0.003% 16, 2017. The AO 3.Share India 4. has also relied on Securities 0.02% the order dated Limited At NSE June 22, 2017. 4.Marwadi and Order states that Shares and 0.04 at “after perusal of Finance Limited BSE investigation 5.Adroit 5. report and taking Financial 0.003% into account, in Services Private 6. particular, the Limited 0.02% miniscule 6.AKG percentage/volum Securities and e of self-trades as Consultancy compared to the total market volume during the investigation period, I am of the view that self-trades of Noticee in the scrip of United Spirits during the investigation period were non-intentional and non-manipulative.” 6. October Rushil 1. AKG 1.0.031 Shri Biju S The order states 13, 2017 Decor Ltd Securities and % that no mala fide Consultancy (paragr intention behind Ltd. aph 20 self-trades 2.Genuine stock of the executed by the Brokers Pvt. Ltd. order) Noticee has been 3.Crosseas 2. brought out in Capital Services 0.031% investigation Pvt Ltd (paragr report. 4.AKG aph 20 The AO further Securities and of the stated that on Consultancy Ltd order) perusal of 3.1.19% investigation 4.0.30% report and taking into account miniscule volume of self-trades as compared to the market volume during the Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

investigation period, no such malafide intention can be established in the present case. 7. October Prakash AKG Securities 0.24% Shri The AO has 30, 2017 Constro and Prasanta disposed of the well Ltd Consultancy Mahapatra matter on the Ltd basis of SEBI’s EAP dated May 16, 2017. The Order states that “after perusal of investigation report and taking into account, in particular, the miniscule percentage / volume during the investigation period were non-intentional and non-manipulative.” 8. October Prakash Adroit Financial 0.24% Shri The AO has 31, 2017 Constrain Services Ltd Prasanta disposed of the well Ltd Mahapatra matter on the basis of SEBI’s EAP dated May 16, 2017. The Order states that “after perusal of investigation report and taking into account, in particular, the miniscule percentage / volume during the investigation period were non-intentional and non-manipulative.”

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

9. Novembe Sun gold Parimal Raj 1.75% Shri The AO has r 02, Capital Suresh disposed of the 2017 limited Gupta matter on the basis of SEBI’s EAP dated May 16, 2017. The order states that “I note that the Self-trades of the Noticee were 1.75% of the market volume. Further, the Investigation Report does not bring out any manipulative intent behind execution of self-trades by the Noticee” 10. Novembe Prakash Chandarana 0.83% Shri The order states, r 08, Constro Intermediaries Prasanta “Volume 2017 well Ltd. Brokers Pvt, Mahapatra transacted in self- Ltd. trades is a factor to analyze the manipulative intention of a person as per the SEBI policy dated May 16, 2017 on the issue of self-trades. If the self-trades of the Noticee is considered in that background then it would be difficult to hold that there was any manipulative intent on the part of the Noticee to engage in international self-trades as the quantity of shares in self-trades of the Noticee to market volume is only 0.83%. Such percentage / Volume of self-

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

trades of the Noticee in the scrip of PCL was miniscule as compared to the total trading in the said scrip during the investigation period.” 11. Novembe Prakash Marwadi NA Shri The order states, r 13, Constro Shares & Prasanta “Since it is not 2017 well Ltd Finance Ltd Mahapatra established that Chandarana had entered into self-trades repetitively to create artificial volume in the scrip, there is no case to draw any adverse inference on the Noticee as regards its role on exercise of due skill and care under Clause A(2) of the Code of Conduct as stipulated under Schedule II read with regulation 7 of broker Regulations, 1992 12. March Ujaas GKN Securities 0.39% Shri K. The percentage 22, 2018 Energy (NSE) Saravanan volume of self- Limited 0.37% trades is negligible (BSE) and is not capable of creating artificial volume. Based on the records made available, it is difficult to hold the view that the self -trades entered into by the Noticee are intentional and are capable to manipulate the scrip.

11. It may kindly be noted that in all the above matters, the proceedings were disposed of since there was no additional evidence to suggest any intention behind execution of self - trades

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

of the Noticees. It is also pertinent to note that after the Enforcement Action Policy decided / adopted by SEBI, all the above orders since June 2017 related to self-trade matters have been disposed of in favor of Noticees. The percentage of Self trade in our present matter is miniscule and the Show Cause Notice does not allege or cite any additional evidence to prove that self-trades were intentional.

12. We could not have manipulated the market with such negligible volume and could not have disturbed the market equilibrium because the self -trades were miniscule in quantity as compared to the total trading volume in the markets. Further, Wockhardt Ltd. was highly liquid in the captioned period (investigation period) both volume and value wise. It is very well understood that volume manipulation is resorted to in illiquid securities to display a false sense of liquidity to general investors and not in highly liquid securities.

BSE Date Symbol Total Trading Ranking Value 22-05-2012 WOCKHARDT 1,020,478,310.00 2 23-05-2012 WOCKHARDT 2,120,429,635.00 1 27-03-2012 WOCKHARDT 414,744,198.00 11 NSE Date Symbol Total Trading Ranking Value 22-05-2012 WOCKHARDT 2,140,012,378.10 5 23-05-2012 WOCKHARDT 4,130,045,842.40 2 27-03-2012 WOCKHARDT 861,869,101.35 35

We would also like to draw your attention to Your Honour’s Order no. EAD- 2/SS/GSS/2018-19/792 dated June 29, 2018 in the matter of Timbor Home Ltd. wherein it is held that "Considering the facts and circumstances of this case, I find that file instances of self-trades alleged in this case were mere an occurrence on account of genuine trading strategies in the liquid and volatile scrip at the relevant time. The self-trade in question were, thus, purely accidental/incidental in the ordinary course of business. In addition, it is noted that the contribution of the Noticee’s self-trades vis-ii-vis the total market volume is miniscule. No main fide intention behind self-trades executed by the Noticee has been brought out in the SCN/investigation Report.”

This finding of Your Honour in the matter of Timbor is squarely applicable in the instant matter too.

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

13. Self-Trade volume of approximately 0.41% to market volume would be like a drop in the ocean of liquidity in Wock hardt Ltd., and no one would intentionally attempt it. There can’t be any purpose of attempting to inject, say 0.41% extra liquidity in already the most highly liquid scrip. In this regard, we draw your attention to SEBI order no. WTM/ MPB/ EFD- 1-DR A-3/102/ 2017 dated November 30, 2017 in respect of AKG Securities and Consultancy Limited, where the WTM disposed the SCN in favour of Noticee. In this order, the WTM, inter-alia observed that “Self-trades executed by the Noticee in the scrip of RDL was at the time of listing when liquidity in the scrip was high". This was one of the factors on the basis of which WTM decided the matter in favour of the Noticee.

14. Moreover, in such a highly liquid environment, it would well high be impossible to intentionally do any self-trade successfully. There would be an extremely high probability (almost certainty) that any attempted self-trade would actually get traded with a third party.

15. Based on all our above arguments, we submit that our self-trade volume was miniscule, had no effect on the liquidity of Wockhardt Ltd., which was already highly liquid, and that it was purely unintentional.

16. The below mentioned findings of SEBI in other cases, on the basis of which the show cause notice was disposed of in favour of the Noticees are applicable in this matter also- "On examination of the trade and order log with respect to the self - trades, I find that the user id and location/terminal id for the buy and sell orders were different thereby corroborating the submissions of the Noticee". (Order no. AO/ BJD/ MAS/ EAD/ 91/ 2017dated December 19, 2017 in respect of Genuine Stock Brokers Pvt Ltd)

"There was no consistent/repetitive pattern of placing buy and sell orders by Noticee as the orders were placed by different dealers through different terminals" (Order no. AO/ BJD/ MAS/ EAD/76/ 2017 dated December 08, 2017 in respect of Smart Equity Brokers Pvt Ltd)

17. The below mentioned finding of WTM in order no WTM / MPB/ EFD-1-DRA-3/102/ 2017 dated November 30, 2017 in the matter of Rushil Decor Limited, on the basis of which the show cause notice was disposed of in favour of the Noticee is on the same footing as our instant case-

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

"Out of 576 alleged self -trades, 572 self -trades for 2, 66,184 shares were executed through different terminal ID’s and 4 self -trades for 1,635 shares were executed through same terminal ID."

18. Kindly refer to the Adjudication Order no. EAD-2/DSR/ RG/ 07/2013 in respect of Crosseas Capital Services Pvt in the matter of trading activities in the scrip of Servalakshmi Papers Limited. The Order states that "I find merit in the submissions made by the Noticee with respect to the matching of trades due to the also trading software system used by the Noticee and that if tire self-trades are counted and examined at the terminal / trader id level then the member of internal matching is much lower than the one alleged in the SCN." The same pattern and characteristics apply to this matter as well. This Servalakshmi matter was decided in our favour.

19. It can be seen in various self-trade matters that there is no structure to the self -trades in terms of order quantity, price, or actual matched quantity. Moreover, there is no charge of synchronized trades. All our self-trades were purely co-incidental to high speed trading and purely unintentional. The same has been taken on record by AO Shri BJ Dilip in the matter of Bedmutha Industries Ltd and accordingly proceedings initiated against us was dropped. (SEBI's AO order no. EAD/AO/BJD/YS/96/2018 dated July 26, 2018).

20. Further, the below mentioned finding of SEBI, on the basis of which the SCN was disposed of in favour of the Noticee is applicable in this matter also- “I have taken note that there was difference in quantity between the buy and sell orders of the self -trades. On examination of the order log I find that out of the total of125 trades only 8 trades were found to be matching buy and sell quantity. Also, I find that there is nothing to indicate that the impugned self-trades have impacted the price of the scrip" (Order no. AO/BJD/ MAS/ EAD/76/2017 dated December 08, 2017 in respect of Smart Equity Brokers Pvt Ltd)

21. Similarly, in the Order passed by the WTM in the matter of Orissa Minerals Development Company Limited, it is clearly mentioned that mere occurrence of self-trades may be accidental and it may attract the provisions of Regulation 4(a) and (g) of the PFUTP Regulations, 2003 if any additional material, evidence or circumstances are available to indicate manipulation of the price or volume of the scrip or creation of false or misleading appearance of trading in securities market resulting from such self-trades. It is further stated that "the SCN has been issued upon the Noticee inter alia on the basis of Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

execution of said number of self-trades in the scrip of OMDCL and no further material is available to indicate that such self-trades were manipulative or resulted into creation of false or misleading appearance of trading in the securities market or executed for manipulating the price or volume of tl1e scrips. ....... In this respect, I note that since no material to establish that the said self-trades were manipulative or created false or misleading appearance of trading in the securities market or executed for manipulating the price or volume of the scrip."

22. The details of the order log given in the matter of Orissa Minerals Development Company Limited under inspection, are as follows: a. Order which resulted into partial and miniscule self-trades were part of much larger "ORIGINAL" orders genera ted by our approved Alga software. b. This original order gets modified into a smaller quantity based on progressive matching, which would depend on the conversion of the original order into trade. (Based on market movement) This modified order is itself f a miniscule percentage of the original order and further a miniscule percentage of this modified order might have accidently and rarely resulted into self-trades. The remaining pa r t of the original and modified order gets matched with orders of other market participants or gets expired. c. Further, given the odd / random quantities of orders that partially resulted in self - trades, it can be concluded that such orders themselves were not "ORIGINAL" orders generated by the Alga, but "MODIFIED" orders for both quantity (based on unfilled quantities) as well as price (based on market movement). Intentional self-trading on the other hand will attempt to match "ORIGINAL" orders on both buy/sell legs, which shall also be of same quantity as well as price.

Similar facts are applicable in the instant matter too.

23. Your kind attention is drawn to our submissions on facts in the matter of Servalakshmi Papers Limited. The same trading pattern and characteristics apply to this matter as well. That the self -trades were purely unintentional and coincidental can be borne out by the facts as below:

a. All the trades have been executed on the approved Alga Trading Software in an automated manner and there is no manual punching of trades.

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

b. Internally matched trades (self-trades) are spread over a large number of individual trader ids (multiple server’s / lease lines). Actual self-trades within the same user id is much less than as alleged in the show ca use notice. c. Self-Matched trades are random in nature and spread throughout the d ay. d. Self-Matched quantities are extremely small as compared to order size, random and unequal. e. If at all, only a miniscule proportion of any given order has converted into self-trades on account of system generated trading mechanism by using Approved Alga Trading Software because of the order pattern of other market participants. Besides, system generated orders have only been rarely and accidentally matched internally, and in odd quantities. Orders, whether resulting in rare internal matching or not, have been placed at or around the market price. Intentional trades, on the other hand attempt to match entire order quantities on both sides and in large order sizes. f. The internal matching has also happened on account of the latency factor in the system of Alga Trading in which system places orders at ULTRA HIGH FREQUENCY and there is a ttime latency on account of lease line distance, drop of packets in the leased lines, due to which some of the trades may have rarely and accidentally matched internally as the buy/sell orders are placed at Ultra High Frequency and automatically. g. Orders were never placed with the intent to do a self-trade. h. The current scrip was highly liquid in the captioned period (investigation period). It is well understood that synchronized and intentional self-trades are conducted in illiquid items to display a false sense of liquidity. There is no purpose of attempting to inject liquidity in already highly liquid scrip. i. There is no charge relating to price manipulation, exit or entry provider, etc. Of any other kind against us other than mere occurrence of self-trades.

24. Further, we are enclosing hourly-position summary of our trading in the scrip of Wockhardt Ltd. The data reveals that the positions on NSE/ BSE largely offset each other at all points of the day. Thus, we did not gain any benefit from intraday price movement of the stock. (A copy of hourly position summary of Wockhardt Ltd. is enclosed as 'Annexure B'.)

25. It may kindly be noted that on the basis of all the above submissions the below mentioned SCNs in self-trade matters have been disposed of in our favour. The list of the SCNs are as follows-

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

Sr. No Details of Show Cause Notice Exoneration order Adjudication Officer 1. SCN no. E&AO/ RA/JP/ 22160/ 2015 AO order no. Ms. Rachna dated August 06, 2015 in the matter of RA/JP/166171/2017 Anand dated September United Sprit Ltd. 29,2017 2. SCN dated May 02, 2016 in the matter of Multi AO order no. Ms. Rachna Commodity Exchange of India Ltd. RA/JP/184-188/ 2017 Anand dated September 29,2017

3. SCN no. E&AO/ RA/JP/14678/2016 dated AO order no. RA/JP/ Ms. Rachna May 02, 2016 in the matter of Apollo Ty res 172-181/ 2017 dated Anand Ltd. September29,2017

4. SCN no.EAD-2/ DSR/ RG/12470/2015 AO order no. EAD/ AO- Shri dated May 06, 2016 in the matter of Aster NP/SJ /50/ 2017 dated Nagendraa Silicates Ltd June22, 2017 Parakh

5. SCN .no. EAD-5/ ADJ /SVKM/HKS/OW AO order no. Shri B.J. Dilip /31023/1/2016 dated November 15, 2016 in the EAD/AO/ BJD/VS/96/ matter of Bedmutha Industries Ltd. 2018 dated July 26, 2018

6. SCN no. EAD-5/ ADJ /SVKM/ HKS/ AO order no. EAD- Shri Biju S OW/33577/1/ 2016 dated December 14, 5/BS/A0/01/ 2017-18 2016 in the matter of Rushil Decor Ltd dated October 13, 2017

7. SCN SEBI/ HO/EAD/EAD6/ 0W/ P/ AO order no. EAD- Shri Santosh 2017/12458/7 dated May 31,2017 in the 2/SS/GSS/ 2018-19/792 Shukla matter of Timbor Home Limited dated June 29, 2018

8. SCN dated April OS, 2016 in the matter of AO order no. Shri Prasanta SRS Limited PM/ NK/ 2018-19/ 203 Mahapatra dated May 21, 2018

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

9. SCN dated October 31,2017 in the matter of AO order no.EAD- Shri B.J. Dilip Inventure growth & Securities Limited 7/ BJD/ BKM/ 95 / 2018- 19 dated July 20, 2018

10. SCN dated June 05, 2013in the matter of AO order no.EAD- Shri D.Sura Servalakshmi Papers Limited. 2/ DSR/ RG/07/ 2013 Reddy dated November 27, 2013

11. SCN dated September11, 2017 in the AO order no. Shri Ananta matter of Orissa Minerals Development WTM/AB/EFD-1/DRA- Barua Company Limited 1/11/ 2018-19 dated December 28, 2018

26. Kindly refer to the Adjudication Order no. EAD-2/DSR/RG/07/2013 in respect of Crosseas Capital Services Pvt in the matter of trading activities in the scrip of Servalakshmi Papers Limited. The Order states that "I find merit in the submissions made by the Noticee with respect to the matching of trades due to the Algo trading software system used by the Noticee and that if the self-trades are counted and examined at the terminal I trader id level then the number of internal matching is much lower than the one alleged in the SCN."

27. Kindly refer to the Adjudication Order no. EAD/ AO/NP/SJ/50/2017 in respect of Crosseas Capital Services Pvt in the matter of trading activities in the scrip of Aster Silicates Limited. Kindly note that the Show Cause Notice has been disposed of by Adjudicating Officer Shri Nagendra Parekh on the basis of the above said Enforcement Action Policy. The order records that, "There is no evidence to suggest any intention behind execution of self-trades by the notice. Therefore, in compliance of SEBI policy, I am inclined to drop the adjudication proceedings initiated against the Noticee vide SCN dated May 06, 2015." a. We have used the same strategy Algo in this case as it was used in Aster Silicate Ltd and all our other matters mentioned above. b. Methodology adopted for selection of scrip of Wockhardt Ltd. is same as that used for selection of Aster Silicate Ltd.

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

28. Further, kindly refer to the Adjudication Orders dated September 29, 2017 passed by AO Ms. Rachna Anand, where the show cause notice was disposed of in our favour- a. Adjudication Order no. RA/JP/ 184 -188/ 2017 in respect of Crosseas Capital Services Pvt in the matter of trading activities in the scrip of Multi Commodity Exchange of India Ltd. b. Adjudication Order no. RA/JP/ 172 -181/2017 in respect of Crosseas Capital Services Pvt in the matter of trading activities in the scrip of Apollo Tyres Ltd. c. Adjudication Order no. 166-171/ 2017 in respect of Crosseas Capital Services Pvt in the matter of trading activities in the scrip of United Spirits Ltd. In all the above three proceedings, the AO Ms. Rachna Anand, disposed of the show cause notices in the favour of us by stating that "incidental self-trades or the mere execution of self trades, are not per-se manipulative/fraudulent". In these cases, we have used the same Alga strategy as was used in the present case.

29. Your Honour’s attention is drawn to your Honor’s order no. EAD2 /SS/GSS/2018- 19/792 dated June 29, 2018 in our own case in the matter of Timbor Home Ltd- "In high frequency transactions or trading by way of Algo strategy when dealers are placing order through same stock broker but using different terminals, trades of the same broker matt gel matched incidentally without any intent of 'self-trading’ or plan or device to create of artificial volume or to manipulate the price."

30. Your Honor's attention is also drawn to AO Order no. EAD/ AO/ BJD / VS/ 96/ 2018 d a ted July 26, 2018 in respect of Crosseas Capital Services Pvt Ltd in the matter of Bedmutha Industries Ltd- "Admittedly, there are infrequent, random and incidental instances of self-trades from amongst the large number of trades of the Noticee in the scrip when it was highly liquid and volatile at the relevant time. Considering the facts and circumstance of this case, find that tile instances of self trades alleged in this case were merely an occurrence on account of genuine trading strategies in the liquid and volatile scrip at the relevant time. The 'self-trade' in question were, thus, purely Accidental / incidental in the ordinary course of business." The same is applicable in this case too

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

31. We reiterate that the said orders have been accepted by SEBI Board and no review u /s15 (I) (3) has been carried out by the board and neither is possible anymore due to expiry of limitation period.

32. We draw your Honour’s attention to WTM order no. WTM / MPB/EFD1DRA-3/102/ 2017 dated November 30, 2017 in respect of AKG Securities and Consultancy Limited in the matter of M /s Rushil Decor Limited, where the show cause notice was disposed of in favour of the Noticee. The WTM, inter-alia, considered the fact that "The day to day trading pattern of the Noticee in the scrip of RDL was same as of other scrips". In this regard, it may kindly be noted that our trading pattern in the scrip of Wockhardt ltd was same as that other scrips traded by us in the same time period. On a daily basis, before, during and after the said time period, we traded in the many scrips apart from Wockhardt Ltd. with the same ALGO displaying the same trading pattern. In this regard, please note the following-

Sr. No Date NSE PRO SCRIP BSE PRO SCRIP COUNT COUNT 1 17-02-2012 359 356 2 24-05-2013 411 412 3 30-05-2013 400 401 4 22-07-2013 363 362 5 24-07-2013 349 350

33. We state that the proceedings need to be dropped in view of the Enforcement Action Policy and series of precedents as stated above. The Hon'ble Securities Appellate Tribunal has held in numerous cases that in an adjudicating proceedings, if a party relies on adjudication order passed in another case, then judicial discipline demands that the Adjudicating Officer considers that order and there after passes an order either to follow or distinguish the earlier order or disagree with the order by recording reasons as to how that ought not to be followed. [One such order of Hon'ble SAT was in the matter of RM Shares Trading Private Limited vs. SEBI (dated August 7, 2014)].

34. Your Honour's attention is also drawn to order dated April 20, 2016 of Hon'ble SAT in the matter of Krishna Enterprises v SEBI, wherein it was held that passing conflicting orders

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

would not promote the development of securities market and would not be in the interest of the securities market.

35. It is pertinent to note the content of the Enforcement Policy dated May 16, 2017 (EFD/DRA-3/0N/332/2017) which states that "while considering the policy view on the issue of self-trades the specific legal provisions applicable to self-trade i.e. 4(2)(a), (b) and (g) of PFUTP Regulations, 2003 were examined and based on the examination done by EJ:D, it is observed that intention is a sine qua non for establishing manipulation in case of self-trade and accidentals /unintentional self-trades are not covered under the said regulations... Therefore, in all the matters of self-trades, an assessment has to be made regarding whether the said trade was intentional or unintentional on the basis of supporting evidence and the manipulation caused by indulging in self-trades should be clearly brought out".

36. We refer to the, AO order dated September 28, 2017 in Crosseas Capital Services Private Limited, wherein Ms. Rachna Anand referred to the matter of Krupa Soni & Ors. V/s SEBI (Appeal No. 32/ 2013) decided on January 24, 2014 and pointed out that in case of Krupa Soni & Ors., the total executed self-trades by the appellant was 3.26% of the total market volume in the scrip. In other words, self-trades which are greater than 3% of the total market volumes in a particular scrip has been considered as substantial having impact upon volumes in the scrip. In this regard we most humbly submit that, the AO in its penalty order dated September 28, 2017 wrongly calculated the volume percentage of self-trades in total market and had come to an incorrect percentage of 4%, SEBI's counsel admitted as much during the SAT proceedings that our trading volumes percentage was in fact only 1.95%. The only deciding factor used by AO in levying the penalty vide its order dated September 28, 2017 was the benchmark of 3% set in the matter of Krupa Soni & Ors, which was prior to adoption of Enforcement Action Policy & dated May 16, 2017and hence not even applicable as a benchmark. Never the less, even if this benchmark is considered our volumes at approximately 0.41 % is considerably below the 3% benchmark as set by the AO.

37. It is to be noted that SEBI's own committee (SMAC) that comprised of eminent IIM Ahmedabad professor and head of SMAC Shri Jayant Varma, CEO's of all exchanges, and other high ranking officials, had noted in its meeting held on Jan 30,2014 that "It was felt that self-trades could be possible in the scenario wherein multiple traders in a broking house may be placing buy and sell orders in same scrip for different clients or Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

multiple ALGO orders of the same broker get matched, without any intent of self-execution, creation of artificial volume, manipulation etc."

It is submitted that expert opinion corroborates our submissions that in our case HFT/ALGO trading led to unintended self-trades.

38. It may also be noted that as per international practices, it is accepted that in large trading, including own/ proprietary account can result in self-trades and unintentional and accidental self-trades are not punished.

39. In respect of the content of the SCN relating to the charge of PFUTP regulations, we would like to submit that if the charge of PFUTP violations in respect of our own proprietary trades is dropped, the charge of failure of due diligence as a broker will also have to be dropped as we cannot be accused of not carrying out due diligence about something which is not wrong / illegal.

40. In this regard, we reply on the judgment of the Hon'ble Supreme Court in the matter of Rakhi Trading (Civil Appeal No. 1969 of 2011, dated February 08, 2018 Page no.53 para 44) which clearly states that brokers cannot be held accountable in such matters.

41. It is not possible for traders to prevent self-trade from occurring. Trades are executed in an exchange's order matching system. Once an order is accepted by trading system, it is not possible for trader to have control over who the counter-party is at the time of matching of that trade, as the trading engine finds and matches orders based on price time priority. We have made several representations to NSE on this issue, clearly demonstrating that monitoring of self-trades and prevention thereof only could have been done at the level of exchanges. (Copy of one such letter dated January 08, 2015 is enclosed as 'Annexure C'). Therefore, SEBI itself had directed the stock exchanges to come out with a mechanism to curb the self - trades. Accordingly, the stock exchanges have come out with their Self Trade Prevention Mechanism in 2015.

42. The sophisticated surveillance systems of SEBI and of the Exchanges never detected any abnormality or problem with Self Trades including our Self Trades. If the monitoring by exchanges and SEBI who have invested heavily in these systems and have deployed huge surveillance teams did not find anything abnormal in the course of their monitoring in the matters of self-trades obviously brokers cannot be accused of failure in the same matters. Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

43. From the above explanation and also from the paragraphs above it is very clear that the intent of our Also has already been decided to be non-manipulative and non-disruptive.

44. We have clearly demonstrated our genuine case and therefore we seek exoneration on the basis of our submissions and series of precedents. Your Honour attention is drawn to Order dated April 20, 2016 of Hon'ble SAT in the matter of Krishna Enterprises vs. SEBI, wherein it was held that passing conflicting Orders would not promote the development of securities market and would not be in the interest of the securities market.

45. In the light of our above submissions we request your Honour to grant us an opportunity of preliminary personal hearing, which we believe will be sufficient to close the matter.

46. In the event your Honour chooses not to exonerate us, in that case we seek inspection of all the documents/ materials replied upon and relevant to the present proceedings, as sought above.

47. We most humbly request your Honour not to proceed in the matter against us in any adverse manner till all the documents sought in inspection are provided to us and there after an opportunity of hearing is granted to us.”

Consideration of submissions and findings:

5. Before dealing with the violations alleged in the SCN, it would be appropriate to refer to the provisions of PFUTP Regulations, 2003 and Stock Brokers Regulation, 1992 which have been alleged to be violated by the Noticee. The relevant extract of these provisions is as under:

Relevant extract of PFUTP Regulations, 2003:

Regulation 3: Prohibition of certain dealings in securities No person shall directly or indirectly (a) Buy, sell or otherwise deal in the securities in a fraudulent manner;

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

(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 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. (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; ……………………………………… (g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security;

Relevant extract of Stock Brokers Regulations, 1992:

A. General.

(3) Manipulation: A stock-broker shall not indulge in manipulative, fraudulent or deceptive transactions or schemes or spread rumors with a view to distorting market equilibrium or making personal gains.

6. I have perused the allegations, submissions of the Noticee and material available on record. In the present case, the Noticee is alleged to have violated Regulations 3 (a)(b),(c) and (d), 4(1), 4(2)(a) and (g) of SEBI(PFUTP) Regulations, 2003 and Clause A(3) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of Stock Brokers

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

Regulations, 1992, by carrying out self-trades repeatedly in its own account, thereby, i) creating artificial volume in the scrip, leading to false and misleading appearance in the securities market; and ii) indulging in manipulative, fraudulent or deceptive transactions distorting market equilibrium.

7. In its reply, the Noticee has not disputed the factum of self-trades. However, the Noticee has denied the allegations made against it in the SCN on the ground that the self - trades in the present matter were purely unintentional/accidental and were executed due to algo trading software used by the Noticee. Further, it has been contended that the volume of such unintentional/accidental self-trades executed was only, approximately, 0.41% of total combined market volume of scrip of Wockhardt Ltd. on both NSE and BSE. The calculation of the self-trade volume submitted by the Noticee is as follows:

Sr. Volume of Self Trades Total Market % of Self Trades to total No (A) Volume(B) Market (A/B)

1 1,45,475 6,92,73,810 0.21% NSE during 02/01/2012 (as stated in para 2.19 of to 31/07/2012 (as stated SCN dated September in para 2.19 of SCN 5,2022) dated September 5,2022) 2 2,58,476 2,97,09,885 0.87% BSE during 01/08/2012 (as stated in para 2.19 of to 08/08/2013 (as stated SCN dated September in para 2.19 of SCN 5,2022) dated September 5,2022) Total (BSE+NSE) 4,03,951 9,89,83,695 0.408%

8. In order to emphasise the importance of intention in self-trades, the Noticee relied upon several orders passed by adjudicating officer of SEBI (SEBI order dated September 29, 2017 in the matter of United Spirits Limited, SEBI order dated June 22, 2017 in the matter of Aster Silicates Ltd., etc.) wherein after

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

considering SEBI’s Policy on self-trades the Show Cause Notice issued to the Noticee has been disposed. I have gone through the orders submitted by the Noticee. I note that in the matter of Aster Silicates Limited the adjudication officer vide order dated June 22, 2017 dropped the proceedings against the Noticee. In the said matter, the Adjudication Officer relied upon the self-trade policy of SEBI and inter alia observed that there is no evidence to suggest any fraudulent intention behind execution of self-trades by the Noticee.

9. In order to show that the self-trades alleged in the SCN were not intentional, the Noticees have contended that these trades were algo trades and hence, no intention could be imputed to them for the trades happened due to algo trading. In this regard, I note that SEBI, vide Circular no. CIR/MRD/DP/24/2013 dated August 19, 2013 on ‘Testing of software used in or related to Trading and Risk Management’, has inter alia mandated testing and approval of software used by stock brokers for algo trading by exchanges. In the present case, the Noticee has submitted that he was using algo trading software for executing the impugned trades. In case of algo trading, self-trades cannot be attributed to the broker unless there is allegation of price or volume manipulation or self-trades were executed as a part of some fraudulent scheme. I note that no allegation regarding, reversal trading, synchronized trading or executing orders away from Last Traded Price or creation of New High Price etc. is made in the SCN. Further, no fraudulent pattern / modus operandi of fraud is given in the SCN regarding the impugned self-trades. In such a scenario, in the absence of allegation/circumstances indicating towards any manipulative intent of the Noticee in executive of the impugned self-trades, such self-trades cannot be termed as intentional and thus, not hit by PFUTP Regulations, 2003.

10. The violation of Clause A (3) of the code of conduct under Schedule II of the Stock Brokers Regulations against the Noticee is solely based on the violations of the PFUTP Regulations alleged against the Noticee. In the previous paras, it has been found that violations of PFUTP Regulations, 2003 are not made out Final Order in the matter of Crosseas Capital Services Pvt. Ltd.

against the Noticees, therefore, the violations of Clause A(3) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of Stock Brokers Regulations, 1992, are also not made out.

Directions:

11. In view of the above, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4), 11B of SEBI Act, 1992 read with Section 19 of the SEBI Act, 1992, hereby dispose of the SCN against the Noticee without any directions.

12. This order comes into force with immediate effect.

13. A copy of this Order shall be served on the Noticees, recognized Stock Exchanges, Depositories, Registrar and Share Transfer Agents of Mutual Funds to ensure compliance with the above directions. -sd- ANANTA BARUA Date: June 19, 2023 WHOLE TIME MEMBER Place: Mumbai SECURITIES AND EXCHANGE BOARD OF INDIA

Final Order in the matter of Crosseas Capital Services Pvt. Ltd.