Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

WTM/SM/EFD-DRA-2/9900/2020-21 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under section 12(3) of Securities and Exchange Board of India Act, 1992 read with regulations 28(2) of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 In respect of S. No. Name of the Noticee SEBI Registration No. PAN 1 Vishal Vijay Shah INB011277614 BBJPS3622P

In the matter of Maharashtra Polybutenes Ltd.

1. In terms of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 (hereinafter referred to as ‘Intermediaries Regulations’), a proceeding was initiated by Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) against Vishal Vijay Shah (hereinafter referred to as ‘Noticee’), Member, Bombay Stock Exchange and a stock broker registered with SEBI. For the said purpose, SEBI, vide an Order dated July 13, 2015, appointed a Designated Authority (hereinafter referred to as ’DA’) under Regulation 24(1) of the Intermediaries Regulations to enquire into the violations alleged to have been committed by the Noticee and to submit a report in accordance with the provisions of the Intermediaries Regulations. Upon completion of the enquiry, an Enquiry Report dated March 28, 2019 was submitted by the DA to the Designated Member (hereinafter referred to as ’DM’). 2. Based on the findings of facts and after considering the explanations offered by the Noticee, the DA has noted in his Enquiry Report that the Noticee, being the stock broker, had repeatedly purchased shares of Maharashtra Polybutene Limited (hereinafter referred to as ‘MPL’/ ‘Company’) from the market in the name of his three clients viz. Saurabh

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

Chandrakant Nagarsheth (Saurabh), Kamlesh Lalitkumar Nagarsheth (Kamlesh) and Viipul Bhagwandas Shah (Vipul) but transferred those shares to 13 other entities in off-market transactions, instead of transferring the shares to the demat accounts of the above stated clients’ accounts. It was further noted that thereafter, the Noticee purchased back 83,547 share back from the said 13 entities into the demat accounts of Saurabh, Kamlesh and Vipul by way of market transactions. The above acts of indulging in selling shares on off-market to the 13 entities and then buying shares from those 13 entities by the Noticee into the accounts of his three clients through the market was viewed as an act of indulging in circular trading and thereby creating artificial volume in the scrip of Maharashtra Polybutene Limited (hereinafter referred to as ‘MPL’/‘Company’). For the sake of convenience, Saurabh, Kamlesh and Vipul have been collectively referred to as ‘Clients’ in the present order. 3. In view of the above, the DA has observed that the Noticee’s acts of misutilization of his clients’ securities or using the accounts of the clients so as to create volume in the scrip through circular trading was in violation of SEBI Circular ref. SEBI/MRD/SE/Cir–33/2003/27 dated August 27, 2003. The DA has further observed that failure on the part of the Noticee to adhere to the prescribed Code of Conduct especially to maintain a high standard of integrity, due skill, care and compliance with statutory requirements, etc. required from a stock broker, was also in violation of the provisions of Clauses A(1), (2) and (5) of the Code of Conduct for Stock Brokers as specified in Schedule II of Regulation 7 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 (hereinafter referred to as ‘Stock Brokers Regulations’). 4. In the light of the above and in accordance with regulation 27 of the Intermediaries Regulations, vide Enquiry Report dated March 28, 2019, the DA has recommended for suspension of the Certificate of Registration of the Noticee as a Stock Broker (INB011277614) for a period of 6 months. 5. Based on the recommendation made by the DA through his Enquiry Report,

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

a post-enquiry Show Cause Notice (“SCN”) dated May 15, 2019 was issued to the Noticee in terms of regulation 28(1) of Intermediaries Regulations enclosing therewith a copy of the Enquiry Report and calling upon him to show cause in terms of Regulations 28(1) and 28(2) of the Intermediaries Regulations as to why suitable action, including passing of appropriate direction, as the DM may considers appropriate, should not be issued against him. 6. I note that the SCN was delivered at the address of the Noticee on May 17, 2019. However, no reply to the said SCN was submitted by the Noticee. Therefore, vide letter dated October 22, 2019, the Noticee was provided with an opportunity of personal hearing on January 29, 2020. The Noticee appeared for personal hearing on the scheduled date and made submissions on the lines of his earlier submissions made before the DA. The Noticee had also sought additional time of 10 days to make further written submissions on the SCN dated May 15, 2019. 7. However, no written submission from the Noticee has been received till date. The Noticee was also granted another opportunity of personal hearing on September 29, 2020 to enable him to make further submissions on the matter, if any, in his defence. However, the Noticee failed to appear for personal hearing on the said scheduled date. 8. In view of the above, from the material on record, it is noted that the Noticee has not made any written submissions or offered any written explanation rebutting the observations recorded by DA while recommending the suspension of certificate of the Noticee as a stock broker for a period of 6 months. However, apart from making oral presentation during personal hearing, the Noticee had not offered any explanations on merit even before the DA. I find that, vide letter dated February 12, 2019, the Noticee had made certain submissions, which are summarised herein below : (i) The Ld. Adjudicating Officer vide Order dated 28-03-2018 exonerated Mr. Kamlesh Lalitkumar Nagarsheth and Rahul R

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

Raghvan. (ii) An appeal has been filed Mr. Vipul B Shah before the Hon'ble SAT challenging the Order of the Adjudicating Officer imposing a penalty of INR 15.00 Lakh and therefore, a request was made to please keep the aforesaid matter in abeyance till the final outcome of the appeal filed before the Tribunal. (iii) Transactions were executed in the scrip of Today's Writing Products Ltd, Denim enterprises Ltd., K Sera Sera Productions Limited and Kamna Cables Limited by Late Vijay Bhagwandas Shah and SEBI itself had exonerated Late Vijay Bhagwandas Shah in three matters i.e. Adani Export Limited, KRBL Limited and Vijay Textiles Limited and therefore no allegation should have been made against himfor the transactions executed by Late Vijay Bhagwandas Shah. Consideration of issues: 9. I have gone through the Enquiry Report of the DA carefully, the SCN issued to the Noticee, submissions available on record made on behalf of the Noticee and having considered the above, I find the issues which arise for my consideration are as follows: a. Whether the alleged acts of misutilization of clients’ securities/account by the Noticee was in violation of SEBI Circular No. SEBI/MRD/SE/Cir– 33/2003/27 dated August 27, 2003? b. Whether the alleged acts of indulging in circular trading to create artificial volume in the script of MPL by the Noticee was in violation of Clauses A(1), (2), (3), (4) and (5) of the Code of Conduct for Stock Brokers as specified in Schedule II of Regulation 7 of the Stock Brokers Regulations as being failure on his part to adhere to the prescribed Code of Conduct in respect of possessing high standard of integrity, due skill, care and compliance with statutory requirements, etc.? c. If yes, what would be the appropriate measure that can be issued against him under Regulation 28 of Intermediaries Regulations?

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

10. Before I proceed to consider as to whether the allegations made against the Noticee would sustain on the basis of materials available on record, I find it appropriate to refer to the relevant provisions of the law allegedly violated by the Noticee. The said relevant legal provisions are reproduced below: SEBI Circular No. SEBI/MRD/SE/Cir–33/2003/27 dated August 27, 2003 4. Similarly in the case of securities also giving / taking delivery of securities in “demat mode” should be directly to / from the “beneficiary accounts” of the clients except delivery of securities to a recognized entity under the approved scheme of the stock exchange and / or SEBI. Stock Broker Regulations Regulation 7 Code of Conduct for Stock Broker under Schedule –II of the Stock Broker Regulations A. General. 1) Integrity: A stock-broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all his business. 2) Exercise of due skill and care: A stock-broker shall act with due skill, care and diligence in the conduct of all his business. 5) Compliance with statutory requirements: A stock-broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the Board and the Stock Exchange from time to time as may be applicable to him. 11. Based on the aforesaid, I proceed to examine the findings recorded by DA so as to assess if the actions of the Noticee, as narrated at para 2 above, are in contravention of the provisions of SEBI Circular No. SEBI/MRD/SE/Cir–33/2003/27 dated August 27, 2003 as well as the provisions of Clauses A(1), A(2), and A(5) of the Code of Conduct for Stock Brokers as specified in Schedule II of Regulation 7 of the Stock Brokers

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

Regulations. 12. I note that the investigations conducted by SEBI into the scrip of MPL was primarily on account of the fact that the said scrip witnessed sudden spurt in the volume and the price, whereas the Company i.e. MPL had no positive past record so far as its financials are concerned, so as to support such a sudden rise in volume and price of its scrip. The investigation revealed that it was the manipulative trades indulged in by several entities which were responsible for the unexpected spurt in the price and volume of the scrip of MPL which also included the role of the Noticee in indulging in circular trading through the account of his clients. The Investigation, prima facie, noticed that the Noticee had transferred 85,500 shares of MPL which were purchased by way of market transactions for his three clients viz., Saurabh, Kamlesh and Vipul, to another set of 13 entities in off-market. Subsequently, the Noticee re-purchased 83,547 shares from these 13 entities into the accounts of his three clients by way of market transactions. The whole series of transactions had taken place in the following manner: Table 1: Trades of the Noticee and his clients with 13 entities S. Circular Date Transferred/s Received/ buyer Transferred- Received- Qty Market No. Trades eller Name Name BOID/seller broker BOID/buyer (M)/off member market (0) 1 24,000 03-Sep-09 VISHAL GANPAT RAJ JAIN IN30107180063672 I N 30214810971728 6000 O 15-Sep-09 VISHAL GANPAT RAJ JAIN IN30107180063672 I N 30214810971728 5000 O 17-Sep-09 VISHAL GANPAT RAJ JAIN IN30107180063865 I N 30214810971728 5000 O 23-Oct-09 VISHAL GANPAT RAJ JAIN IN30107180063865 I N 30214810971728 1 500 O 27-Oct-09 VISHAL GANPAT RAJ JAIN IN30107180063672 I N 30214810971728 2000 O 30-Oct--09 VISHAL GANPAT RAJ JAIN IN30107180063865 I N 30214810971728 2000 O 11-Nov-09 VISHAL GANPAT RAJ JAIN IN30107180063865 I N 30214810971728 1500 O 26-Nov--09 VISHAL GANPAT RAJ JAIN IN30107180063865 I N 30214810971728 1500 O 16-Oct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 3000 M 20-Oct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 3000 M 21-Oct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 1500 M 22-Oct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 3000 M 23-Oct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 1500 M 27-Oct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 2000 M 28-0ct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 2000 M 29-Oct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 2000 M 30-0ct-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 2000 M 09-Nov-09 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 2000 M

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

25-Nov-D9 GANPAT RAJ BGSE FINANCIALS JAIN SAURABH LTD. VISHAL 2000 M 2 8,500 SANTOSH SUWALAL RELIGARE 06-Oct-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 500 M SANTOSH SUWALAL RELIGARE 07-Oct-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 1000 M SANTOSH SUWALAL RELIGARE 09-Oct-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 1000 M SANTOSH SUWALAL RELIGARE 28-Oct-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 2000 M SANTOSH SUWALAL RELIGARE 03-Nov-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 1000 M SANTOSH SUWALAL RELIGARE 09-Nov-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 1000 M SANTOSH SUWALAL RELIGARE 09-Nov-09 CHANGEDIA VIPUL SECURITIES LTD. VISHAL 1000 M SANTOSH SUWALAL RELIGARE 09-Nov-09 CHANGEDIA VIPUL SECURITIES LTD. VISHAL 1000 M 05-Oct-09 SANTOSH SUWALAL IN30107180063672 IN30177414912328 2500 CHANGEDIA VISHAL O 27-Oct-09 SANTOSH SUWALAL IN30107180063672 IN30177414912328 CHANGEDIA VISHAL 2000 O 30-Oct-09 SANTOSH SUWALAL Direct Transfer IN30177414912328 1000 CHANGEDIA VISHAL O 05-Nov-09 SANTOSH SUWALAL Direct Transfer IN30177414912328 3000 CHANGEDIA VISHAL O 3 7,500 RAJASHREE SANTOSH 05-Oct-09 VISHAL CHANGEDIA IN30107180063672 I N 30177414912310 2500 O 04-Nov-09 RAJASHREE SANTOSH VISHAL CHANGEDIA Direct Transfer IN30177414912310 2000 O RAJASHREE SANTOSH 27-Oct-09 VISHAL CHANGEDIA IN30107180063865 I N 30177414912310 1500 O RAJASHREE SANTOSH 27-Oct-09 VISHAL CHANGEDIA IN30107180063865 I N 30177414912310 1500 O RAJASHREE SANTOSH RELIGARE 07-Oct-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 1000 M RAJASHREE SANTOSH RELIGARE 09-Oct-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 1500 M RAJASHREE SANTOSH RELIGARE 28-Oct-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 3000 M RAJASHREE SANTOSH RELIGARE 05-Nov-09 CHANGEDIA SAURABH SECURITIES LTD. VISHAL 2000 M 4 7,497 29-Sep-09 VISHAL SURENDRA KHATRI IN30107180063672 I N 30214810971728 7500 O SURENDRA HEM SECURITIES 01-Oct-09 KHATRI KAMLESH LTD. VISHAL 2497 M SURENDRA HEM SECURITIES 01-Oct-09 KHATRI SAURABH LTD. VISHAL 2500 M SURENDRA HEM SECURITIES 06-Oct-09 KHATRI SAURABH LTD. VISHAL 2500 M 5 6,000 PUNITABEN M 29-Sep-09 VISHAL SHARMA IN654721 1205430000024423 6000 O PUNITABEN MAHESHBH ASE CAPITAL 09-Oct-09 AI SHARMA KAMLESH MARKETS LTD. VISHAL 6000 M 05-Oct-09 VISHAL ANUJ SANJEEV IN30107180063672 I N 30177414139144 2500 O

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

6 5,500 GANDHI ANUJ SANJEEV 30-Oct-09 VISHAL GANDHI Direct Transfer IN30177414139144 1000 O 04-Nov-09 ANUJ SANJEEV VISHAL GANDHI Direct Transfer IN30177414139144 2000 O ANUJ SANJEEV RELIGARE 06-Oct-09 GANDHI SAURABH SECURITIES LTD. VISHAL 500 M ANUJ SANJEEV RELIGARE 07-Oct-09 GANDHI SAURABH SECURITIES LTD. VISHAL 1000 M ANUJ SANJEEV RELIGARE 09-Oct-09 GANDHI SAURABH SECURITIES LTD. VISHAL 1000 M ANUJ SANJEEV RELIGARE 03-Nov-09 GANDHI SAURABH SECURITIES LTD. VISHAL 1000 M ANUJ SANJEEV RELIGARE 05-Nov-09 GANDHI SAURABH SECURITIES LTD. VISHAL 2000 M 7 5,500 05-Oct-09 SANJEEV NIHALCHAND VISHAL GANDHI IN30107180063672 I N 30177414044940 2500 O 30-Oct-09 SANJEEV NIHALCHAND VISHAL GANDHI Direct Transfer IN30177414044940 3000 O SANJEEV VISHAL NIHALCHAN RELIGARE 06-Oct-09 D GANDHI SAURABH SECURITIES LTD. 600 M SANJEEV VISHAL NIHALCHAN RELIGARE 07-Oct-09 D GANDHI VIPUL SECURITIES LTD. 1000 M SANJEEV VISHAL NIHALCHAN RELIGARE 09-Oct-09 D GANDHI SAURABH SECURITIES LTD. 900 M SANJEEV VISHAL NIHALCHAN RELIGARE 03-Nov-09 D GANDHI SAURABH SECURITIES LTD. 1500 M SANJEEV VISHAL NIHALCHAN RELIGARE 04-Nov-09 D GANDHI SAURABH SECURITIES LTD. 1500 M 8 4,500 KANCHANBEN KIRTI R.SHAH VISHAL AMICHAND SHARES & STOCK 10-Nov-09 MADHANI VIPUL BROKERS PVT.LTD. 3000 M KANCHANBEN KIRTI R.SHAH VISHAL AMICHAND SHARES & STOCK 24-Nov-09 MADHANI SAURABH BROKERS PVT.LTD. 1500 M KANCHANBEN AMICHAND 10-Nov-09 VISHAL MADHANI IN654721 1204130000004281 2675 O KANCHANBEN AMICHAND 12-Nov-09 VISHAL MADHANI 1205480000009837 1204130000004281 325 O KANCHANBEN AMICHAND 25-Nov-09 VISHAL MADHANI IN654721 1204130000004281 1500 O 9 4,000 PARAG AMICHAND 17-Nov-09 VISHAL MADHANI HUF IN654721 1204130000006654 2 000 O PARAG AMICHAND 20-Nov-09 VISHAL MADHANI HUF 1205480000009837 1 2 04130000006654 2 000 O PARAG AMICHAND KIRTI R.SHAH MADHANI SHARES & STOCK 16-Nov-09 HUF SAURABH BROKERS PVT.LTD. VISHAL 2000 M PARAG AMICHAND KIRTI R.SHAH MADHANI SHARES & STOCK 20-Nov-09 HUF SAURABH BROKERS PVT.LTD. VISHAL 2000 M 10 3,500 13-Nov-09 VISHAL INDIRA V TRIVEDI IN654721 1203600000580723 3500 O INDIRA V 17-Nov-09 TRIVEDI SAURABH SHAREKHAN LTD. VISHAL 3500 M 11 3,000 PURVI KAMLESH 09-Nov-09 VISHAL CHANDE IN654721 1203210000067318 3000 O MANUBHAI PURVI MANGALDAS KAMLESH SECURITIES 10-Nov-09 CHANDE SAURABH PVT.LTD. VISHAL 3000 M 11-Nov-09 VISHAL DEVEN TRIVEDI IN654721 1203600000543459 3500 O

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

12 2,500 DEVEN 13-Nov-09 TRIVEDI SAURABH SHAREKHAN LTD. VISHAL 2050 M 13 2,000 SULOCHANA 15-Dec-09 VISHAL MAHADEO BOBADE IN654721 1202570000111017 2000 O SULOCHANA MAHADEO SHILPA STOCK 15-Dec-09 BOBADE VIPUL BROKER PVT.LTD. VISHAL 2000 M 83,547 13. I note that the afore listed transactions have neither been disputed by the Noticee before the DA, nor has the Noticee offered any explanation with supporting documents disputing the execution of any of the trades detailed out in the above table. As per the records, the submissions made on behalf of the Noticee have been confined and limited to only seeking exoneration from the allegations on the grounds that in another proceedings involving the same scrip, one Mr. Kamlesh and Mr. Rahul R Raghavan (Rahul) (who were the clients of the Noticee) have been exonerated by the Adjudicating Officer (AO) vide his order dated March 28, 2018, hence, the present proceedings against the Noticee should also be dropped. It has also been submitted that an appeal has been field against the above order of AO in which a penalty of Rs. 15,00,000/- was imposed on another client of the Noticee viz. Mr. Vipul. Thus, it is observed that Mr. Kamlesh and Mr. Vipul who were the Noticees in the aforesaid matter, are also the clients of the Noticee, alongside Mr. Saurabh, in the present proceedings whose accounts have allegedly been used by the Noticee to make the above noted circular trades. Therefore, it has been contended by the Noticee that pending the disposal of the appeal filed by Vipul before SAT against the said Adjudication Order, the instant proceedings should also be kept in abeyance. 14. It is observed that although the order passed by AO referred to above, is with respect to the trading in shares of MPL, involving 3 persons out of which two persons are involved in the trades which are subject matter of present proceedings, the facts pertaining to the proceedings in which the above-mentioned order of AO has been passed and the facts of present proceedings are factually distinguishable, as the said AO order was passed with respect to the allegation of price and volume manipulation in the scrip of MPL for a different investigation period leading to the violation of SEBI

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

(Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 2003, whereas, the instant proceedings have been initiated for another investigation period and for different reasons i.e. the involvement of the Noticee in circular trading by misusing his clients’ accounts. It is also important to note that the three clients mentioned in the said AO order are close relatives of the Noticee. In that case, the main findings of AO were as below:  Vipul, Kamlesh and Rahul, being clients of the Vishal therein (also Noticee in the present proceedings), had entered into synchronized trades with 115 front entities.  As per the submissions of Kamlesh, trades were placed and executed by Vishal and the records of Kamlesh were taken in possession by Vishal on the pretext of representing before SEBI.  The AO has specifically noted in para 42 of the said Adjudication Order that Vishal had used the accounts of his clients to manipulate the securities market.  The AO has further noted the contentions of Kamlesh and Rahul in para 43 that that they were not aware of the synchronized transactions involved in that proceedings, in respect of which the allegations were made against them. Further, the AO had ordered the Vishal to appear for cross-examination which he had not complied with to come clean of the charges. Thus, in the above order passed by the AO, two of the clients of the Noticee therein namely Mr. Kamlesh (also a client in the present proceeding) and Mr. Rahul were not found to be guilty and were discharged by the AO from the allegations of manipulative trades against them. However, another clients of the Noticee, Mr. Vipul (also a client in the present proceeding), was found to be guilty on whom AO imposed a penalty of Rs. 15,00,000. At the same time, it is also observed in the said adjudication order that Vishal

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

Vijay Shah (the Noticee in the present proceedings) has not only failed to provide documents sought during investigation but also failed to come clean before the AO by not appearing for the cross examination. It indicates that the AO’s order being relied upon by the Noticee was not a favourable order for the Noticee. Moreover, I find that. on the basis of same set of facts, a separate enquiry proceeding was initiated against the Noticee by SEBI and based on the enquiry report, vide order dated July 08, 2020, SEBI has already ordered cancellation of certificate of registration of the Noticee as a stock broker after finding out that the Noticee was engaged in synchronized trades, circular trades and creation of artificial volume in the scrip of MPL by misutilizing clients’ securities inter-alia in violation of the provisions of SEBI Circular No. SEBI/MRD/SE/Cir–33/2003/27 dated August 27, 2003. It may be noted that the Noticee has been once again charged for similar violations in the present proceeding for which he has already been held guilty vide the aforesaid order dated July 08, 2020. Similarly, the reliance placed by the Noticee upon the abovementioned AO order making a request that the present proceeding be kept in abeyance is entirely devoid of merit, more so, when the present proceedings are factually distinguishable from the earlier proceedings and also the fact that the Noticee has already been found guilty by the earlier proceedings involving trades in the shares of MPL as discussed above. 15. The Noticee has further pleaded for exoneration from the present proceeding stating that in the past, proceedings against late Vijay Bhagwandas Shah (father of the Noticee) in the matters of Adani Export Limited, KRBL Limited and Vijay Textiles were dropped. In this respect, I note that the proceedings referred to by the Noticee pertain to the Adjudication proceedings, which were disposed of as abated on account of the demise of the said noticee therein i.e. Late Vijay Bhagwandas Shah and were not disposed of on merit. Therefore, the submissions of the Noticee is not tenable and it is not open to the Noticee to seek parity on that ground. 16. I also note that the Noticee is a repeated offender of securities law for which Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

proceedings were initiated against him in the past. For illustration, two Adjudication Orders dated September 14, 2015 and February 23, 2018 were passed against the Noticee vide which monetary penalty of Rupees 15,00,000 was levied on the Noticee in each of the Adjudication Orders. 17. Similarly, three separate orders dated December 12, 2018, July 01, 2020 and July 08, 2020 were issued by Whole Time Members of SEBI (WTM) against the Noticee, wherein also the charge of misutilization of clients’ funds and securities was found established. In this respect, I further note that Vide order dated December 12, 2018, the certificate of registration of the Noticee was suspended for 6 months, whereas vide order dated July 01, 2020, the certificate of the Noticee was suspended for a period of one year and finally, vide order dated July 08, 2020, looking at the grievous charges against the Noticee, the registration of the Noticee as a stock broker was cancelled. 18. Moving on to the facts of the matter, I note that Late Vijay Bhagwandas Shah, the father of the Noticee, and Mr. Vipul Bhagwandas Shah were brothers. Saurabh, Kamlesh and Vipul were also related to the Noticee and the same facts have not been disputed by the Noticee either before the DA or before me. I further note that the Noticee has not offered any explanation disputing the execution of trades in the names of the above named three clients (also the relatives of the Noticee) as listed out in the Table 1 above, hence, I proceed to examine those trades which undisputedly were executed by the Noticee. In this regard for the purpose of understanding, analysis of a sample circular trade executed in the scrip of MPL by the Noticee is illustrated below: 19. Trades of Ganpat Raj Jain (Ganpat): From the above table, I observe that Ganpat had received a total number of 16,000 shares of MPL from Vishal on September 03, 15 and 17, 2009 in off-market transfers. Subsequently, Ganpat sold 10,500 shares of MPL in market on October 16, 20, 21 and 22, 2009 which were purportedly purchased by Saurabh (client as well as relative of the Noticee). Using the shares received by him from Vishal,

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

Ganpat fulfilled his pay-in obligation of the said 10,500 shares. At the same time, being the broker of Saurabh for the on-market transactions of Saurabh with Ganpat, the Noticee received back these shares through pay-out of the securities. Thus, a series of circular trades of a total number of 10,500 shares of MPL got executed. 20. Similarly, Ganpat received a total number of 8,500 shares of MPL in 5 off-market transactions dated October 23, 27, 30 and November 11 & 26, 2009. At the same time, Ganpat sold a total number of 13,500 shares to Saurabh by way of market transactions dated October 23, 27, 28, 29, 30 and November 09 & 25, 2009. Using the 8,500 shares received by him from Vishal and 5,500 shares left with him by virtue of transactions mentioned in previous paragraph, Ganpat fulfilled his pay-in obligation of the said 13,500 shares. At the same time, being the broker of Saurabh for the market transactions of Saurabh with Ganpat, the Noticee received back these shares through pay-out of the securities. Thus, another series of circular trades for 13,500 shares of MPL got executed. A graphical representation showing circular trades amongst the Noticee, Ganpat and Saurabh in both the aforesaid illustrations can be shown as below:

21. From the above, it is evident that circular trades for a total number of 24,000 shares in the scrip of MPL, which was an illiquid scrip, were executed. While Ganpat sold shares to Saurabh in market transactions, the Noticee was Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

making off-market transfer to the seller i.e. Ganpat, for fulfilling his pay-in obligations. Similarly, the Noticee also used the account of his clients for executing circular transactions with rest of the 12 entities, as mentioned in Table 1 above and thereby has indulged in series of circular trading which have resulted in generating artificial volume in the scrip of MPL. 22. I further observe that the Noticee, who is member of BSE, had transferred a total number of 85,000 shares to 13 entities as mentioned in the table above and purchased back a total number of 83,547 shares (3.33% of the market volume during the investigation period) from them in the trading accounts of his 3 clients viz. Saurabh, Kamlesh and Vipul. The Noticee has preferred to remain silent and has offered no explanations on the allegations of not adhering to the Code of Conduct prescribed for the Stock Brokers. There is no rebuttal by the Noticee justifying the execution of those trades on behalf of his buy clients and subsequent transfer of the said shares in off market transactions to 13 other entities. No explanation has been offered by the Noticee as to why the shares which were purchased in the name of Saurabh, Kamlesh and Vipul were not credited to their respective demat accounts, but transferred to 13 other entities through off market mode and as to how and under what circumstances, the same were again purchased on the market platform, from the same 13 entities. As I have already noted above, the Noticee had not denied the execution of trades. The Noticee has not submitted any justifiable reasons explaining the circumstances behind the execution of such trades as detailed out in the table above. I also find that the Noticee has not submitted any documents viz, demat statement of entities, contract notes issued against the trades, bank statement in support of the trades to justify that the trades were actually executed as per instruction of his clients. Rather, as I have pointed out earlier, the Noticee has in the past also indulged in misutilizing client demat and trading accounts, for which he was issued summons and called for the cross examination. As noted above, the Noticee has failed to appear before the Adjudicating Officer to counter/disprove the allegation

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

against him that trades executed in the account of Saurabh were trades of Saurabh and not executed by him. 23. I note that all the trades except for one trade mentioned in Table-1 above have taken place in the months of October and November 2009. At the same time, I note from the price-volume data available on the website of BSE that MPL was a thinly traded scrip with very less traded volume, however, out of those small volume of trades, the Noticee was consistently generating more that 5% of the total trading volume during the months of October and November 2009. 24. Considering the aforesaid, in the absence of any documents furnished by the Noticee rebutting the allegations, I am constrained to observe that the documents available on record are sufficient enough to bring home the charges levelled on the Noticee. The evidences on record coupled with the absolute silence on the part of the Noticee, ostensibly suggest the misuse of account of the clients and securities for creating artificial volume in the scrip of MPL during the investigation period. Accordingly, it is beyond doubt that the Noticee had indulged in circular trading in the scrip of MPL so as to create artificial volume in the scrip of MPL for which he used the accounts of his clients and securities therein, flagrantly in violation of the SEBI Circular No. SEBI/MRD/SE/Cir–33/2003/27 dated August 27, 2003 and Clauses A(1), (2), and (5) of the Code of Conduct of Stock Brokers as specified in Schedule II of Regulation 7 of the Stock Brokers Regulations. 25. As stated above, the violations committed by the Noticee in the present proceeding are neither the solitary ones nor are the violations committed by him for the first time in his career as a stock broker. The Noticee in fact has a history of misutilization of clients funds and securities for which he has been repeatedly found to have acted in violations of various provisions of securities law, for which penalties have been imposed on him from time to time and at the same time, his certificate of registration as a stock broker has also been suspended for different periods from time to time by SEBI. Further, as noted above, the certificate of registration of the Noticee has

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

already been cancelled vide WTM order dated July 08, 2020. 26. I note that the DA is his report has recommended for suspension of registration of the Noticee as a stock broker of BSE. However, meanwhile, vide order dated July 08, 2020 referred to above, passed by WTM, SEBI, the registration of the Noticee (Vishal Vijay Shah) as a stock broker of BSE has already been cancelled. The Noticee had obtained registration as a broker in his individual capacity which now stands cancelled in view of the aforesaid order passed by SEBI. It is pertinent to note that the violations for which the registration of the Noticee has been cancelled were committed by him in his individual capacity as a stock broker and his career as an individual stock broker is replete with various fraudulent activities such as circular trades, synchronized trades, misutilization of clients’ funds and securities for which he has been penalised repeatedly from time to time. The Noticee has also had a history of non-cooperation with SEBI and has not complied with the Notices and summons and has not appeared for cross examination before SEBI. I am of the view that such conduct on the part of the Noticee clearly shows his utter disregard for market integrity, compliance requirements of SEBI or even directions given to him by SEBI, be it for submission of any information or appearance for the purpose of cross-examination. I am of the view that his continued association in his individual capacity with securities market in any manner may not be in the interest of the securities market and may pose serious risk to market and may also jeopardise the interest of general investors. Therefore, in light of the above, it becomes necessary that suitable firm measure be taken against the Noticee in the interest of securities market to protect the interest of the investors. ORDER 27. Accordingly, I, in exercise of the powers conferred upon me under Section 19 read with Section 12(3) of the SEBI Act read with Regulation 28(2) of the Intermediaries Regulations, hereby debar Vishal Vijay Shah from being employed or associated with any registered intermediary or other registered

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.

person dealing in securities market, directly or indirectly and in any other manner, for a period of 1 year. 28. This Order shall come into force on expiry of twenty-one days from the date of this Order. This Order disposes of the enquiry proceedings initiated against the Noticee following the investigation conducted by SEBI into the alleged irregularities in the trading in the scrip of Maharashtra Polybutenes Limited for the period September 29, 2009 to December 31, 2009.

Sd/- Date: January 08, 2021 S. K. Mohanty Place: Mumbai Whole Time Member

Order in respect of Vishal Vijay Shah in the matter of Maharashtra Polybutene Ltd.