Order in respect of Mr. Amit Bansal

WTM/RKA/IVD/NRO/ 155/2014 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 11 AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN RESPECT OF MR. AMIT BANSAL IN THE MATTER OF SHAMKEN MULTIFAB LIMITED. 1. Securities and Exchange Board of India (hereinafter referred to as “SEBI’) investigated into the unusual price movement in the scrip of Shamken Multifab Limited (hereinafter referred to as “SML” or the company) following an unusual sharp rise in price from ₹6/- on February 23, 2000 to ₹25.55/- on July 20, 2000 accompanied with an unusual rise in net traded quantity, from average traded volume of 9,800 shares in the period May-June 2000 to 92,400 shares during the period June 21, 2000 to July 18, 2000. 2. The investigation, inter alia, revealed that :– (a) There was a price movement in the share price of SML from ₹6/- on February 23, 2000 to ₹25.55/- on July 20, 2000. The analysis of trading has been carried out in two different trading periods, i.e., February 23, 2000 to June 20, 2000 and June 21, 2000 to July 18, 2000. (b) Trading in the scrip of SML was largely concentrated with two stock brokers, namely, Maheshwari Technical & Financial Services Ltd. (hereinafter referred to as “Maheshwari”) and Adroit Financial Services Ltd. (hereinafter referred to as “Adroit”) who had entered into large number of cross and structured deals.

These brokers were mainly trading for a common client namely Vandana Securities Ltd. (hereinafter referred to as “Vandana”), who was acting as unregistered sub-broker. Adroit had also traded for its clients, namely, Ms. Sonali Bansal, Shiv Vani Associates and Mr. Moti Ram. The affairs of firm Shiv Vani Associates and trades of Ms. Sonali Bansal were handled by one Mr. Amit Bansal (husband of Ms. Sonali Bansal and brother of Mr. Manish Bansal). (c) Mr. Kalu Ram had purchased 23,800 shares through Ms. Sonali Bansal and sold to Mr. Pawan Mishra, who is a driver of Mr. Ajay Kumar Agarwal, Director, Prasneeta Constructions Pvt. Ltd. (hereinafter referred to as “Prasneeta”). (d) Vandana was mainly trading for Prasneeta and Dhanvarsha Investments (hereinafter referred to as “Dhanvarsha”). Prasneta and Dhanvarsha were linked to each other. The proprietor of Dhanvarsha, namely, Mr. Jeev Narain Mishra is an employee of director of Prasneeta. Both Dhanvarsha and Prasneeta had admitted that they were trading for SML group. They have

Order in respect of Mr. Amit Bansal also stated that they were introduced to SML group by Mr. P. K. Agarwal who is a Chartered Accountant and also a friend of Mr. Praveen Juneja, director of SML. (e) Mr. P. K. Agarwal reportedly played an instrumental role in managing the share price manipulation for SML. It has been submitted by Mr. I. C. Jindal of Vandana that Mr. P. K. Agarwal used to place orders on behalf of Dhanvarsha and Prasneeta. (f) The entire trading in the shares by these clients was for various promoter group concerns of SML. SML has admitted that their promoter group concerns had acquired shares from Dhanvarsha. Fund flow trail has also shown that Dhanvarsha and Prasneeta had received money from SML group concerns for the purpose of trading in the scrip of SML. SML had also given funds to these entities for acquiring its own shares. It is clear that SML attempted to influence price rise of its scrip by trading effected through front entities. Dhanvarsha, Prasneeta and Vandana who did not have certificate of registration from SEBI to deal in securities. (g) Further, by creating false market in the scrip, the entities, i.e., stock brokers/Vandana/ Dhanvarsha/Prasneeta/Mr.

P. K. Agarwal/SML and its group concerns also apparently have attempted to induce general public to deal in the scrip. Probably, the motive could be to exit from the scrip (after booking profit) once general public had been lured into it. 3. In view of the above, show cause notice ("SCN") dated August 31, 2004 was issued under section 11B of the Securities and Exchange Board of India Act, 1992 ("SEBI Act") read with regulation 12 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 ("PFUTP Regulations, 1995") read with regulation 11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ("PFUTP Regulations, 2003") by SEBI to Mr. Amit Bansal (hereinafter referred to as "the noticee") calling upon him to show cause as to why directions under section 11B of the SEBI Act, 1992 including, inter-alia, directions of restraining him from accessing the securities market and prohibiting them from buying, selling and dealing in securities, should not be issued against him.

In the SCNs issued to the noticee it was, inter alia, alleged that:– (a) Two brokers of NSE namely Maheshwari and Adroit accounted for approximately 95% of the total net traded quantity during the relevant period and that both the aforesaid brokers had mainly traded on behalf of their common client, namely, Vandana. (b) Apart from Vandana, Adroit had also dealt for Ms. Sonali Bansal and Shiv Vani Associates. The trading done by these two clients of Adroit are as follows: Buy Sell Sonali Bansal 79,500 55,700 Shiv Vani Associates 2,300 8,300 (c) Mr. Ajay Kumar Gupta, director of Adroit has stated that Mr. I. C. Jindal, director of Vandana, had introduced these two clients to them and that the noticee was placing orders and receiving deliveries for Ms. Sonali Bansal and Shiv Vani Associates. (d) While the noticee admitted in his statement recorded on October 31, 2003 that he has traded on behalf of his wife Ms. Sonali Bansal. Mr. Manish Bansal proprietor of Shiv Vani Associates stated that his firm was involved in buying and selling of shares for various clients and the affairs of this firm were handled by the noticee.

(e) Mr. Amit Bansal has stated that all the trading for Ms. Sonali Bansal in the scrip of SML was actually done on behalf of Mr. Kalu Ram Aggarwal and that Mr. Kalu Ram Aggarwal was also introduced to him by Mr. I. C. Jindal. (f) Mr. Kalu Ram stated in his statement that he purchased shares from Ms. Sonali Bansal (on whose behalf the noticee was trading) and sold these shares to Mr. Pavan Mishra for brokerage and that Mr. Pavan Mishra had been introduced to him by Mr. I.C. Jindal. Mr. Kalu Ram Agarwal further stated that since Mr. I.C. Jindal would not deal in cash, he accepted the offer of Mr. I.C. Jindal and took cash from Mr. Pavan Mishra and gave the same to the noticee and in turn gave him the shares of SML, which were handed over to Mr. Pavan Mishra. (g) Mr. Pavan Mishra was a driver to Mr. Ajay Kumar Aggarwal, director of Prasneeta and the SML group was trading in the scrip through Prasneeta. The noticee was a director in Maheshwari, which was involved in number of structured and cross deals with Adroit. (h) The noticee has lent the name of Ms. Sonali Bansal and Shiv Vani Associates and thereby provided a link to SML for rigging the share price of SML.

The noticee has thus aided and abetted the market Manipulation in the scrip of SML by Vandana, Mr. I. C. Jindal and SML group. (i) It was alleged that the noticee has violated the provisions of regulation 4(a), (b) and (c) of the PFUTP Regulations, 1995 read with regulation 4 (2) (a) and (e) of the PFUTP Regulations, 2003. Further, by dealing as an unregistered sub-broker, the noticee has violated rule 3 of the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Rules, 1992 ("the Stock Brokers Rules") (since rescinded) read with section 12(1) of the SEBI Act, 1992. 4. Vide his letter dated October 8, 2004 the noticee filed his reply to the SCN and submitted, inter alia, the following: (a) The noticee is not aware of the alleged unusual rise in the net traded quantity of the shares of SML during the period as alleged.

(b) His dealing in the shares of SML was just incidental and the said transaction effected by him had nothing to do with the said alleged unusual rise in the net traded quantity of the shares of SML as alleged. (c) He does not have any comment with respect to the trading quantity effected by Maheshwari. (d) He was not aware of the trading by Adroit during the alleged relevant period. (e) He was not aware of the aforesaid transaction done by Maheshwari and Adroit with Vandana. (f) He does not dispute the findings of the investigation with respect to the dealing of Adroit with Ms. Sonali Bansal and Shiv Vani Associates. (g) He placed orders in the shares of SML to Adroit on behalf of his wife Ms. Sonali Bansal and his brother Mr. Manish Bansal proprietor of Shiv Vani Associates primarily to help them in their venture. The placing of orders, etc. on behalf of his wife and brother was never meant for working as the Sub-Broker to any stock broker and the same was just as a gesture. (h) He was the non-working director of Maheshwari. (i) SEBI has completely failed to establish that there was actually any intention on his part to do rigging in the price of SML and further that his acting on behalf of Ms. Sonali Bansal and Shiv Vani Associates for such a short span of time that too with an intention to help them actually amounted to him acting as a Sub-broker.

(j) SEBI has completely failed to establish as to whether the alleged price rise induced any person/entity to actually buy the shares of SML and whether there was any loss incurred by any person/entity who might have purchased the shares of SML after the alleged false rise in shares of SML. 5. An opportunity of personal hearing was granted to the noticee before the then Whole Time Member of SEBI on November 7, 2008 and December 12, 2008 wherein the noticee appeared on December 12, 2008. However, no order was passed in the matter. Following the principles of natural justice further opportunities were granted to him before me. However, the notices issued in this regard were returned undelivered from the last known address of the noticee. The notice was, therefore, uploaded on SEBI website. However, no response of the noticee has been received. 6. I have considered the SCN and other material on record. I note that the noticee has made his written submissions but has not utilized the opportunities given for personal hearing. I conclude that he does not have to submit anything beyond what has been submitted by him in his written submissions.

I, therefore, proceed to decide the matter on merits considering such written submissions made by the noticee. 7. Before dealing with the allegations and charges, I deem it necessary to refer to the provisions of the SEBI Regulations alleged to have been violated by the noticee in this case. Those provisions are reproduced as under:- SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 " 4. No person shall - (a) effect, take part in, or enter into, either directly or indirectly, transactions in securities, with the intention of artificially raising or depressing the prices of securities and thereby inducing the sale or purchase of securities by any person; (b) indulge in any act, which is calculated to create a false or misleading appearance of trading on the securities market; (c) indulge in any act which results in reflection of prices of securities based on transactions that are not genuine trade transactions; " SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 " 4. Prohibition of manipulative, fraudulent and unfair trade practices (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:- (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (e) any act or omission amounting to manipulation of the price of a security;"

SEBI Act, 1992 "12. (1) No stock broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act."

SEBI (Stock Brokers and Sub-Brokers) Rules, 1992 "3. No stock-broker or sub-broker shall buy, sell, deal in securities, unless he holds a certificate granted by the Board under the Regulations: Provided that such person may continue to buy, sell or deal in securities if he has made an application for such registration till the disposal of such application."

8. I note from the SCN that in the instant case there was a price rise in the scrip of SML from ₹6/-on February 23, 2000 to ₹25.55/- on July 20, 2000. Two stock brokers, viz., Maheshwari and Adroit had entered into cross deals and structured deals in the scrip of SML and through such transactions they had directly/indirectly influenced the price of the scrip. I further note that SML and its group concerns including Shamken Spinners Ltd. were the ultimate clients of the said brokers. These two stock brokers were mainly trading for a common client viz., Vandana, who was mainly trading for Dhanvarsha and Prasneeta. Gross buying and net buying by these two clients constituted 53.08% and 35.75% respectively of the total buying at NSE. I further note that clients of Adroit were Vandana, Ms. Sonali Bansal, Shiv Vani Associates and Mr. Moti Ram. It was stated by Mr. Ajay Gupta, director of Adroit that Mr. I. C. Jindal of Vandana had introduced Ms. Sonali Bansal, Shiv Vani Associates and Mr. Moti Ram for dealing in the shares of SML. I note that Mr. I.C. Jindal is brother-in-law of the noticee.

9. In note that the noticee was placing orders and receiving deliveries for Ms. Sonali Bansal and Shiv Vani Associates. I further note that the noticee is husband of Ms. Sonali Bansal and also brother of Mr. Manish Bansal, proprietor of Shiv Vani Associates. I further note that delivery of 23,800 shares purchased by Ms. Sonali Bansal were handed over to Mr. Kalu Ram, who in-turn gave these shares to Mr. Pawan Mishra, who was driver of Mr. Ajay Kumar Agarwal, Director of Prasneeta. I, therefore, find that the noticee acted as unregistered sub-broker and thus contravened the provisions of rule 3 of the Stock Brokers Rules read with section 12 (1) of the SEBI Act, 1992. 10. I find that the noticee who had traded for the clients of Adroit was also a director in Maheshwari. I also note that trading was largely concentrated with two stock brokers, namely, Maheshwari and Adroit, who had entered into large number of structured and cross deals in the scrip of SML. The noticee has though generally denied the allegations and charges, he has not disputed any transaction, relation, connection alleged in the SCN.

He has also not substantiated his stand on the basis of any material or evidence, whether documentary or circumstantial. It has been submitted by the noticee that he had placed orders in the shares of SML to Adroit on behalf of his wife Ms. Sonali Bansal and his brother Mr. Manish Bansal proprietor of Shiv Vani Associates primarily to help them in their venture.

11. Considering the above facts and circumstances of this case, I do not find any material to differ from the allegations and charges in the SCN and find that Mr. Amit Bansal had played a major role in manipulating the scrip price of SML and thereby violated regulation 4(a), (b) and (c) of the PFUTP Regulations, 1995 read with regulation 4(2) (a) and (e) of the PFUTP Regulations, 2003. Further, by dealing as an unregistered sub-broker, he contravened the provisions of rule 3 of the Stock Brokers Rules read with section 12 (1) of the SEBI Act, 1992. 12. I am of the considered view that such fraudulent activities pose prudential threat to the market integrity and orderly development of securities market. I, however, note that the transaction in question had taken place long back in the year 2000. Further, the SCN that had been issued in the year 2004 does not clearly bring out the magnitude of contribution of the noticee in the alleged price and market manipulation in the scrip of SML. 13. Considering the fact and circumstances of this case and the abovementioned mitigating factors, I, in exercise of powers conferred upon me under section 19 read with section 11(4) and 11B of the Securities and Exchange Board of India Act, 1992, regulation 11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 read with regulation 13 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 hereby restrain Mr. Amit Bansal from accessing the securities market and prohibit him from buying, selling or otherwise dealing in securities, directly or indirectly, in any manner, whatsoever, for a period of one year from the date of this order. 14. A copy of this order shall be served on all recognized stock exchanges and depositories to ensure that the directions given in this order are complied with. This order shall come into force with immediate effect

Sd/- DATE: DECEMBER 9th, 2014 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA