Order in the matter of Polytex India Limited, Gemstone Investments Limited and KGN Enterprises Limited[SAT Appeal No.:205/2019 & Misc. App. No. 266/2019][SAT Appeal No.:206/2019 & Misc. App. No. 267/2019][SAT Appeal No.:207/2019 & Misc. App. No. 268/2019][SAT Appeal No.:208/2019 & Misc. App. No. 269/2019][SAT Appeal No.:209/2019 & Misc. App. No. 270/2019][SAT Appeal No.:210/2019 & Misc. App. No. 271/2019][SAT Appeal No.:211/2019 & Misc. App. No. 272/2019][SAT Appeal No.:212/2019 & Misc. App. No. 273/2019][SAT Appeal No.:356/2019 & Misc. App. No. 433/2019 & 482/2019][SAT Appeal No.:346/2019 & Misc. App. No. 409/2019][SAT Appeal No.:438/2019 & Misc. App. No. 546/2019]

WTM/GM/EFD/86/2018-19 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under Sections 11, 11B and 11(4) of the Securities and Exchange Board of India Act, 1992 read with Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003

In respect of : S. No. Name PAN 1 Jigar Praful Ghogari ASFPG8598L 2 Kiran Bhiku Bhanaes AQUPB0853G 3 Janak Chimanlal Dave AEPPD9110D 4 Dilipkumar Pukhraj Jain AACPJ5643C 5 Bhupesh Harischandra Rathod AACPR3785K 6 Kishan Balaram Shigvan BAWPS1264D 7 Kiran Madhusudan Sheth ALJPS1874Q 8 Shree Shagun Financial Services (SSFS) ABTFS0353F 9 Oliwonders Financial Services Pvt. Ltd. (OFSPL) AABCO2030J 10 Neevan Capital Markets Pvt. Ltd. (NCMPL) AACCN7650G 11 Jatin Shah AACPS6128D 12 Bhavesh Pabari AKGPP8679N 13 Hemant Sheth ANOPS8607E 14 Prem Parikh ALHPP3489N 15 Ankit Sanchaniya BLNPS3316L 16 Jinal Apurval Rawal ATHPR5041C

In the matter of Polytex India Limited, Gemstone Investments Limited and KGN Enterprises Limited.

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), conducted an examination of trading in the scrips of Polytex India Limited (“PIL” or “Polytex”) {for the period – 13.04.2012 to 17.12.2012}, KGN Enterprises Limited (“KGN”) {for period – 27.12.2011 to 17.12.2012} and Gemstone Investments Limited (“Gemstone”) {for the period – 18.04.2012 to 17.12.2012}, all listed at the BSE Limited (BSE). SEBI observed a huge rise in traded volumes and prices of these scrips as given in the following Table:

Order in the matter of KGN, Gemstone and Polytex

Table 1 High - low Name of Scrip Price Variation Serial traded volume Examination Period (based on closing No. during the price) in ₹ period Polytex India April 13, 2012 to 136.5 to 252 (87% 1,688 to 2,94,476 1. Limited December 17, 2012 rise) Gemstone April 18, 2012 to 9 to 19.7 810 to 25,84,018 2. Investments Ltd December 17, 2012 (122% rise) KGN Enterprises December 27, 2011 to 186.55 to 807.45 11 to 2,53,764 3. Limited December 17, 2012 (333% rise)

2. Pursuant to such examination, SEBI vide an ad interim ex-parte Order dated May 10, 2013 (“the interim order”), restrained certain persons/entities, namely, Jigar Praful Ghoghari, Kiran Bhiku Bhanaes, Janak Chimanlal Dave, Jinal Apurval Rawal, Dilipkumar Pukhraj Jain, Bhupesh Harischandra Rathod, Kishan Balaram Shigvan, Kiran Madhusudan Sheth, Shree Shagun Financial Services (“SSFS”), Oliwonders Financial Services Pvt. Ltd. (“OFSPL”) and Neevan Capital Markets Private Limited (“NCMPL”) i.e. Noticees 1 to 11, from accessing the securities market and further prohibited them from buying, selling or dealing in securities in any manner whatsoever, till further directions. The interim order alleged that the above persons/entities prima facie violated the provisions of section 12A(a), (b) and (c) of the Securities and Exchange Board of India Act, 1992 (“the SEBI Act”) and regulations 3(a), (b), (c) and (d) and 4(1), 4(2)(a), (b), (e) and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (“the PFUTP Regulations”) while dealing in the aforesaid scrip. The interim order gave opportunity to all the eleven persons/entities to file their objections, if any, within twenty one days from the date thereof. After giving opportunity to file replies and personal hearing, SEBI, vide Order dated January 07, 2014, confirmed the interim directions against the aforementioned eleven persons/entities, while the detailed investigation in the matter was in progress.

3. Based on the investigation, SEBI decided to initiate several types of enforcement proceedings in the matter, including impounding of the unlawful gains made by the suspected persons / entities in order to prevent such persons/ entities from diverting the funds and to safeguard the interests of securities market. Accordingly, SEBI took urgent preventive steps of impounding and retaining the proceeds by way of an interim measure and passed an Impounding Order dated August 20, 2015, against sixteen entities, which included eleven persons / entities against whom interim and confirmatory orders were passed and five other entities i.e. Noticees 12 to 16.

4. On the basis of the investigation, a common Show Cause Notice (SCN) dated December 30, 2016 was issued to Jigar Praful Ghoghari, Kiran Bhiku Bhanaes, Janak Chimanlal Dave, Jinal Apurval Rawal, Dilipkumar Pukhraj Jain, Bhupesh Harischandra Rathod, Kishan Balaram Shigvan, Kiran Madhusudan Sheth, SSFS, OFSPL, NCMPL, Jatin Shah, Bhavesh Pabari, Hemant Sheth, Prem Parikh and Ankit Sanchaniya (hereinafter collectively referred to as the "noticees"). Jigar Praful Ghoghari, Kiran Bhiku Bhanaes, Janak Chimanlal Dave, Jinal Apurval Rawal, Dilipkumar Pukhraj Jain, Bhupesh Harischandra Rathod, Kishan Balaram Shigvan, Kiran Madhusudan Sheth and Jatin Shah having carried out manipulative trades jointly in the market, are also referred to as the ‘trading noticees’ and SSFS, OFSPL, NCMPL, Bhavesh Pabari, Hemant Sheth, Prem Parikh and Ankit Sanchaniya, having financed the trading members, are referred to as ‘financing noticees’ in the paras below.

5. In the SCN, it was inter alia alleged that :-

1) Based on the bank statements and KYC documents, noticees were found to be connected; 2) From the bank statements of these noticees for the period 01/12/2011 to 17/12/2012, it is observed that the trading noticees have received Rs. 157.14 crore from the SSFS, Rs. 5.16 crore from OFSPL and Rs. 0.63 crore from NCMPL; 3) The funds received by the noticees were directly transferred to stock brokers against their pay in obligations, indicating that the funds were received for trading; 4) The noticees acted as front entities of the Parikh-Pabari group which indirectly traded in the market in violation of the SEBI order dated February 2, 2011; 5) Noticees executed synchronized trades amongst themselves, which resulted in creation of artificial volume in the market; 6) Noticees executed self-trades and reversal trades amongst themselves which resulted in creation of artificial volumes in the market; 7) Noticees also significantly influenced the price in the scrips by contributing to positive Last Traded Price (LTP); 8) The noticees had traded substantially amongst themselves, created artificial volume in the market and also contributed to the positive LTP and thus they manipulated the price - volume in the scrip of PIL, KGN and Gemstone, making an unlawful profit amounting to ₹4.18 crores; 9) Thus the noticees were show caused as to why appropriate directions in terms of sections 11 and 11B of the SEBI Act, 1992 including disgorgement of unlawful gains should not be passed against them for the violations alleged to have been committed by them.

6. The common SCN was not initially served on Jigar Praful Ghoghari, Janak Chimanlal Dave, Jinal Apurval Rawal, SSFS and NCMPL. None of the noticees submitted reply to the SCN. Considering the facts of the case, an opportunity of personal hearing was granted to the noticees on August 21, 2017. The notice of personal hearing was served on all the noticees by Hand Delivery and Newspaper publication.

7. Mr. Vikash Bengani (hereinafter referred as the “AR”) appeared on behalf of all the 16 noticees and made the following preliminary submissions :- (i) As anoither 11B proceeding in the scrip of Polytex is listed for hearing on November 13, 2017, he requested that the two SCNs / proceedings be merged; (ii) As the details of profit calculation was not provided to him, the same may be provided; (iii) The copies of the documents showing reasons for not accepting the recommendation of the Investigating Officer and initiating 11B proceedings against the aforesaid 16 entities by an addendum to the investigation report was sought. This aspect is dealt with separately in this order elsewhere; (iv) As NCMPL and OFSPL are struck off from the MCA list, the proceedings against them should be dropped; (v) Citing the principle of double jeopardy, he stated that simultaneous proceedings U/s. 11B and Adjudication proceedings against all the noticees on the same transactions are not maintainable.

8. All the noticees submitted their replies to the SCN. The Noticees submitted similar /identical replies and hence common issues / grounds have been identified and grouped together and summarized below. Trading noticees, namely; Jigar Praful Ghoghari, Kiran Bhiku Bhanaes, Janak Chimanlal Dave, Jinal Apurval Rawal, Dilipkumar Pukhraj Jain, Bhupesh Harischandra Rathod, Kishan Balaram Shigvan, Kiran Madhusudan Sheth and Jatin Shah inter alia submitted that :- a) Calculation of ill-gotten profits not clarified; b) Need for Addendum to the Investigation Report and office note approving action under Section 11B not furnished. Trade and order log for the period 2009 to 10.05.2013 not provided; c) Requisite documents were not supplied, which is in violation of the Principles of Natural Justice; d) Disputed the connection on the basis of KYC documents, common address, mobile numbers and email IDs etc; e) KYC documents not legible;

f) Received funds from financing noticees purely for business purposes; g) Financing noticees are not debarred entities/persons and even receiving funds from a debarred entity is not a crime. No proof to show that the amount received was utilized for the purpose of trading; h) Investigating officer found no adverse inference from the trading done by suspected entities; i) Investigating officer recommended revocation of direction; j) The mechanism to stop Self Trade was put in place by Stock Exchanges only from October 7, 2015; k) SEBI policy on self-trade, dated May 16, 2017 also relevant in the present case; l) A few instances of self-trades in themselves would not ipso facto, amount to an objectionable trade; m) Regarding synchronized and reversal trades, the Investigating officer had also not drawn any adverse inference, as the volume of such trades compared to the market volume is very low which could not disturb market equilibrium; n) No adverse inference drawn by Investigating officer on the basis of first trade, NHP, off market transfer in the scrip of Polytex; o) Illegal profit is wrongly calculated; p) Suspected entities have actually suffered loss during the investigation period;

Additional submission by Financing Noticees :- a) In the same matter as proceedings against the directors in their individual capacity have been initiated separately, the present proceedings U/s 11B should be dropped against the companies; b) Relying on the judgment of MP Vora Shares & Securities Pvt. Limited Vs SEBI (Hon’ble SAT order dated August 22, 2012), wherein the Hon’ble SAT held that without giving any reason a Designated Member cannot differ from the Designated Authority, it was submitted that in the present matter, the Whole Time Member (WTM) deviated from the recommendation of the Investigating officer without giving any reason; c) No trades were executed by company, thus no violation of PFUTP Regulations is maintainable against the companies; d) In the same matter, through an Interim order dated May 10, 2013, WTM, SEBI directed initiation of Adjudication proceedings against Bhavesh Pabari, Hemant Sheth, Prem Parikh and Ankit R Sanchaniya for non-compliance of SEBI order dated February 2, 2011. Thus following the principles of Double Jeopardy, the present proceedings, should be dropped; e) Transfer of funds to the trading noticees for business purpose is not a crime;

f) Directors of companies were never stopped from doing business other than relating to the securities market.

Consideration 9. The first submission made by the AR is regarding merger of the two proceedings/SCNs. In this regard, it is observed that the present proceedings/SCN, is against 16 entities whereas the second proceedings/SCN is against ten entities. In the two SCNs, there are only five common noticees namely; Shagun Financial Services, Bhavesh Pabari, Hemant Sheth, Prem Parikh and Ankit Sanchaniya. It is also observed that the present SCN is for three scrips PIL, KGN and Gemstone whereas the second SCN is only for PIL. It is also relevant to mention that in the present SCN, the Investigation Period in the scrip of PIL is April 13, 2012 to December 17, 2012 whereas in the second SCN, the Investigation Period is October 12, 2010 to December 30, 2011. Thus, the two SCNs are arising out of two different Investigation. Since my jurisdiction in the present quasi-judicial proceeding is limited to adjudication of the allegations contained in the subject SCN, it was not considered appropriate to merge the present proceedings with another SCN which is not before me.

10. The second plea taken by all noticees is regarding non-furnishing of documents and violation of principles of natural justice. At the outset, I note that 9 out of 16 noticees failed to appear and furnish information to the Investigating officer when called upon by issuing of summons. Further, I note that SEBI had furnished Investigation Report and its annexures, SCN and all documents relied upon in the SCN, to the noticees. SEBI had given an opportunity of inspection to all the noticees. During the personal hearing, the AR of the noticees requested for the calculation of profit details and the same was furnished to him. AR has also raised a request to provide the office note of WTM on the investigation report. It is relevant to state that the noticees cannot insist that the WTM of SEBI is bound by the inferences and proposals of the Investigating Authority (IA). The Noticees are not justified in questioning the authority of the WTM for deviating from the IA’s proposal. The documents that from the basis of the allegation in the SCN, having been provided, it is imperative on the side of the noticees that they defend the allegations without deviating away from the issue. I note that the present proceedings were duly approved by the Competent Authority as prescribed in the Delegation of Powers of SEBI.

11. The third plea taken by eleven noticees who figured in the interim order is regarding the recommendation of investigating officer which was for revocation of interim direction issued vide confirmatory order dated January 7, 2014. In this regard, it is noted from the records that the investigation report was considered by WTM and he accordingly directed investigating officer to look into the possibility of quantification of gains in the alleged manipulative trades and consider if there were circumstances under which Section 11B proceedings under SEBI Act for debarring the Noticees may be continued. As directed, on a further analysis for quantification of gains, the investigation officer found that eight noticees have made unlawful gains of Rs. 3,05,99,174 in the matter. Bearing in mind all the facts of the case along with the magnitude of profit made by the noticees, investigating officer changed his recommendation to proceedings under section 11B of SEBI Act, 1992 along with Adjudication proceedings. It is also pertinent to note that the investigating officer had initially not completely absolved the nine trading noticees but recommended Adjudication proceedings against them. Considering the totality of facts and circumstances of the case, the Competent Authority also held that only Adjudication proceedings in the matter may not suffice and approved proceedings under section 11B of SEBI Act, 1992 along with Adjudication proceedings.

12. Some of the noticees, especially the financing noticees have raised the plea of inflicting of double punishment i.e. proceedings U/s 11B and Adjudication, for the same offence. In this regard, it is relevant to mention that the order of Hon’ble SAT in the matter of M/s Shree Gayatri Shares and Services Pvt. Ltd. Vs. SEBI (Appeal no. 187 of 2009, dated November 4, 2009) wherein similar issue was raised in appeal and Hon’ble SAT held that:- “It appears that the only ground on which the impugned order is now sought to be challenged is that the Board have issued directions under section 11B of the Securities and Exchange Board of India Act, 1992 (for short the Act) debarring the appellant from accessing the securities market could not initiate adjudication proceedings as that would amount to penalizing the appellant twice for the same wrong. This is not so. The Act specifically empowers the Board to issue direction to any person associated with the securities market with a view to protect the interest of the investors and market. The appellant was found indulging in manipulative trades and was, therefore, debarred from accessing the securities market for a period of 2 years. For the same wrong doing, the Act empowers the Board to impose monetary penalty as well by initiating adjudication proceedings. In this view of the matter, we find nothing wrong with the Board initiating proceedings for the imposition of monetary penalty. There is thus no merit in this ground of challenge.”

13. Having dealt with the preliminary and common contentions of the noticees, I now proceed to deal with the allegation in the SCN and submissions of the noticees which relate to the said allegations. In the SCN, it is charged that on the basis of KYC documents, funding and bank statements, thirteen noticees were found to be connected to each other as shown below:-

Table 2 SN Name of PAN Connection details Entity 1 Kiran Bhikhu AQUPB0853G  Common land line no.:- Chirag Jariwala*, Jigar Bhanaes Ghogari and Kiran Bhikhu Bhanaes - 40229880.  Kiran Bhanaes had received funds from Shree Shagun Financial Services (SSFS)*, Oliwonders Financial Services Pvt. Ltd. (OFSPL)* and Jigar Ghogari. 2 Jigar P ASFPG8598L  Common address: Jigar Ghogari, Prem Parikh* and Ghoghari OFSPL* - H No 140k Cavel Cross Lane No 7 3rd Floor 6 Gai Wady Kalbadevi Road, Mumbai, Maharashtra, India, 400002.  Common Mob. no. : Chirag Jariwala*, Jigar Ghogari. - 9920134780.  Common Land line no. : Chirag Jariwala*, Jigar Ghogari and Kiran Bhikhu Bhanaes - 40229880.  Common Mob. no.: Dilip Jain and Jigar Ghogari - 9870895035.  Common E-mail ID : Chirag Jariwala*, and Jigar Ghogari.- BIGFINS1@GMAIL.COM / KANAKSHAGUN@GMAIL.COM/ SSF2AN0J0046@JAADOOMAIL.COM/ CHIRAG_BHAI@YAHOO.COM  Common E-mail ID: Jigar Ghogari and Bhavesh Pabari* - BHAVESH_PABARI2005@YAHOO.COM.  Common E-mail ID : Jigar Ghogari and Prem Parikh* and Chirag Jariwala* - PARIKHPREM@GMAIL.COM / PARIKHPREM@YAHOO.COM  Jigar Ghogari received funds from SSFS*, OFSPL*  Jigar Ghogari had given funds to Kishan Shigvan, Jinal Rawal, Kiran Bhanaes, Kiran Sheth, Janak Dave, Dilip Jain and Bhupesh Rathod. 3 Dilip Pukhraj AACPJ5643C  Common Mob. no.: Dilip Jain and Jigar Ghogari - Jain 9870895035.  Dilip Jain had received funds from SSFS* and Jigar Ghogari. 4 Kishan BAWPS1264D  Kishan Shigvan had received funds from SSFS*, Balaram OFSPL* and Jigar Ghogari. Shigvan

5 Janak C Dave AEPPD9110D  Janak Dave had received funds from SSFS*, OFSPL* and Jigar Ghogari. 6 Bhupesh  Bhupesh Rathod had received funds from SSFS* and AACPR3785K Rathod Jigar Ghogari. 7 Jinal Rawal  Jinal Rawal had received funds from SSFS*, ATHPR5041C OFSPL*, Jigar Ghogari and Janak Dave. 8 Kiran ALJPS1874Q  Common E-mail ID: Kiran Sheth and Hemant Sheth Madhusudan - DEVHEMANT@REDIFFMAIL.COM. Sheth  Common address: Kiran Sheth and Hemant Sheth* - H No 113/115 3rd Floor above Ratanlal Barfiwala 9 Hemant Shop Bhuleshwar Road, Mumbai, Maharashtra, Madhusudan India, 400002. Sheth  Kiran Madhusudan Sheth and Hemant Madhusudan Sheth both have common middle name.  Kiran Sheth had received funds from SSFS*, Neevan Capital Markets Pvt. Ltd. (NCMPL)* and Jigar Ghogari. 10 Jatin Shantilal AACPS6128D  Common Mob. no.: Jatin Shah and Jigar Ghogari - Shah 9821229502.  Jatin Shah has also received fund from the SSFS*. 11 Shree Shagun ABTFS0353F  Provided funds to various entities as mentioned Financial above. Services  SSFS is partnership firm of Bhavesh Pabari & (SSFS) Hemant Sheth. 12 Oliwonders AABCO2030J  Prem Parikh & Ankit Sanchaniya are the director of Financial OFSPL. Services Pvt.  Bhavesh Pabari & Prem Parikh are the director of Ltd. (OFSPL) NCMPL. 13 Neevan AACCN7650G Capital Markets Pvt. Ltd. (NCMPL) 14 Prem Parikh ALHPP3489N 15 Ankit Sanchaniya 16 Bhavesh Pabari * They are the Pabari- Parikh group entities as defined in SEBI order dated February 2, 2011. Bhavesh Pabari and Hemant Sheth are partners of SSFS, Prem Parikh and Ankit Sanchaniya were directors of OFSPL and Prem Parikh & Bhavesh Pabari were directors of NCMPL.

14. SCN further alleged, from the bank statements of the noticees for the period 01/12/2011 to 17/12/2012, that the noticees had received Rs. 157.14 crore from the SSFS, Rs. 5.16 crore from OFSPL and Rs. 0.63 crore from NCMPL. The flow of funds are further represented in tabular format:- Table 3 SN Particulars Funds details 1 Shree Shagun SSFS a/c. no. '911020040956496 Financial  Jigar Ghogari recd Rs. 39.72 cr and paid back Rs. 21.19 cr Services  Janak dave recd. Rs. 18.08 cr & paid back Rs. 2.32 cr  Jinal Rawal recd Rs. 24.26 cr & paid back Rs. 1.40 cr  Kiran Bhanaes recd Rs. 27.97 cr & paid back Rs. 5.01 cr  Kiran Sheth recd Rs. 8.37 cr & paid back Rs. 0.12 cr  Animesh Patel recd Rs. 6.61 cr & paid back Rs. 3.33 cr  Jatin Shah recd Rs. 4.67 cr  Kishan Shigvan recd Rs. 16.58 cr & paid back Rs. 0.25 cr  Dilip Jain recd Rs. 7.27 cr & paid back Rs. 0.85 cr  Bhupesh Rathod recd Rs. 3.61 cr & paid back Rs. 0.52 cr 2 Oliwonders  Jigar Ghogari recd Rs. 2.43 cr & paid back Rs. 0.20 cr Financial  Jinal Rawal recd Rs. 1.59 cr & paid back Rs. 0.09 cr Services Pvt.  Kiran Bhanaes recd Rs. 0.15 cr Ltd.  Kishan Shigvan recd Rs. 0.37 cr  Janak Dave recd Rs. 0.62 cr 3 Neevan Capital  Jigar Ghogari recd Rs. 0.20 cr Markets Pvt.  Kiran Sheth recd Rs. 0.43 cr Ltd. 4 Jigar Ghogari Observed from SSFS a/c. no. '911020040956496  Jigar Ghogari recd Rs. 39.72 cr & paid back Rs. 21.19 cr. Jigar Ghogari a/c. no. '910010002119761  OFSPL paid Rs. 2.43 cr & recd Rs. 0.20 cr  Kiran Bhanesh recd Rs. 0.29 cr  Janak Dave recd Rs. 0.08 cr  Animesh Patel recd Rs. 0.21 cr & paid Rs. 0.2 cr  Jinal Rawal recd 0.05 cr  Neevan Capital Markets paid Rs. 0.2 crore Jigar Ghogari a/c. no. :911020043354844  OFSPL recd Rs. 0.11 cr & paid back Rs. 2.43 cr  Animesh Patel paid Rs. 1.30 cr  Jinal Rawal recd Rs. 3.17 cr & paid Rs. 0.78 cr  Kiran Bhanesh recd. Rs. 2.01 cr  Kiran Sheth recd Rs. 0.85 cr  Janak Dave recd Rs. 0.76 cr  Dilip Jain recd Rs. 0.53 cr  Bhupesh Rathod recd Rs. 1.42 cr & paid back Rs. 0.09 cr  Kishan Shigvan recd Rs. 2.31 cr

15. In response to the same, the Noticees have not produced any satisfactory material/documents to dispute the inferences regarding their relationship / connection. Some of the Noticees like Jigar Praful Ghogari have stated that the KYC document furnished to them was illegible and at most of the places the mobile numbers are different. I note that none of the noticees have denied the veracity of the KYC documents furnished to them. As far as the legibility of the scanned copy of KYC is concerned, I note that all noticees were given an opportunity of inspection of documents and are now precluded from raising these objections at this stage. None of the noticees have produced any KYC document contrary to the documents furnished to them. Some noticees have denied their mobile numbers but failed to give a plausible reason for having shown the mobile number in their KYC document with the Stock Broker and other intermediaries. Further, none of the noticees have disputed the fund transfers in their account.

16. I have analysed the KYC documents of trading noticees and noted that trading done by these noticees was not commensurate with their income disclosed in the KYC documents as elaborated below :- A. Jinal Rawal in his KYC to Bhavik Rajesh Khandhar Shares and Stock Brokers Pvt. Ltd, had declared his annual income between Rs. 10-25 Lakhs. However, the investigation observed that he received an amount of Rs. 24.76 crore from SSFS, an amount of Rs. 1.59 crore from OFSPL and Rs. 3.17 crore from Jigar Ghogari.

B. Similarly, Jigar Ghogari in his KYC document with Parasram Holding Pvt. Limited, Alankit Assignments Ltd, Fairwealth Securities had shown his annual income to be between Rs. 1-5 Lakhs. In contrast to his income, Jigar Ghogari received Rs. 39.72 crores from SSFS and 2.43 crore from OFSPL.

C. Kishan Shigvan in his KYC document with Investmentor Limited, had declared that his annual income is between Rs. 1-5 Lakhs, whereas he received 2.31 crore from Jigar Ghogari and 37 Lakhs from OFSPL.

D. Janak Dave stated in his KYC with Parasram Holding Pvt. Limited and PRL Stock and share Brokers Pvt. Limited, that his annual income is between Rs. 1-25 Lakhs, but he received Rs. 18.08 crores from SSFS and Rs. 76 Lakhs from Jigar Ghogari.

E. Dilipkumar Pukraj stated in his KYC with Investmentor Limited, that his annual income is between Rs. 1-5 Lakhs, but he received Rs. 7.27 crores from SSFS and Rs. 53 Lakhs from Jigar Ghogari.

F. Kiran Bhanaes declared in his KYC with SPJ securities Limited and Investmentor Limited, that his annual income is between Rs. 1-10 Lakhs, but he received Rs. 27.97 crores from SSFS and Rs. 2.01 crores from Jigar Ghogari. G. Jatin Shah stated in his KYC with Inventure Growth Securities Limited, that his annual income is between Rs. 10-25 Lakhs, but he received Rs. 4.67 crores from SSFS. H. Kiran Seth stated in his KYC with SPJ Securities Limited, that his annual income is between Rs. 5-10 Lakhs, but he received Rs. 8.37 crores from SSFS and Rs. 85 lakhs from Jigar Ghogari. I. Bhupesh Harishchandra Rathore stated in his KYC with SPJ securities Limited, that his annual income is between Rs. 1-5 Lakhs, but he received Rs. 3.61 crores from SSFS and Rs. 1.42 lakhs from Jigar Ghogari.

17. There is hardly any correlation between the financial standing of the financing noticees and the amount of finance extended :- A. Bhavesh Pabari stated in his KYC with DDAV Securities Private Limited, that his annual income is between Rs. 1-5 Lakhs, but in contrast to his disclosd annual income, as a partner of SSFS along with the second partner Hemant Sheth, funded Rs. 157.14 crores to trading noticees. B. Hemant Sheth stated in his KYC with UTI Securities Limited and Fair Wealth that his annual income is between Rs. 5-25 Lakhs, but in contrast to his annual income, as a partner of SSFS along with the second partner Bhavesh Pabari, funded Rs. 157.14 crores to trading noticees. C. Prem Parikh stated in his KYC with SPJ Securities Private Limited, that his annual income is between Rs. 1-5 Lakhs, but in contrast to his annual income, as a director of OFSPL and NCMPL, a private limited compnay, funded Rs. 5.16 crores and 63 lakhs respectively to trading noticees. D. OFSPL was a private limited company having authorised and paid up capital of 1 Lakh incorporated on September 23, 2009. As per the RoC filings, the company had not held any AGM and the company had never filed its balance sheet, since its incorporation, but funded Rs. 5.16 crore to the trading noticees. E. Similary, NCMPL was a Private limited company having authorised and paid up capital of 1 Lakh incorporated on April 15, 2008. As per the RoC filings, the company had held its last AGM on September 30, 2009 and the company had last filed its balance sheet on March 31st, 2009, but funded Rs. 63 lakhs to the trading noticees. F. Both of these companies are presently ‘struck off’ from the RoC list.

18. All the trading noticees have taken a plea that “receiving fund from M/s Shree Shagun Financial Services and Oliwonders Financial Services Pvt. Ltd was purely business transactions. They were not debarred entities/person and even receiving fund from a debarred entity is not a crime. The funds received from M/s Shree Shagun Financial Services and Oliwonders Financial Services Pvt. Ltd were nothing to do with the transactions executed in the above said scrips.” None of the noticees have produced any proof of underlying business transactions in respect of which the funds were transferred or received. Considering the financial position of the trading noticees and the absence of other proof, I am inclined to infer that all the funds were transferred and received for trading in the scrip.

19. Noticees have also raised the issue that the entities/person were not debarred and receiving fund from a debarred entity is not a crime. I note that vide SEBI order dated February 2, 2011, Bhavesh Pabari, Prem Parikh, Ankit Sanchaniya and Hemant Sheth were debarred from accessing the securities market and further prohibited from buying selling or dealing in securities in any manner whatsoever. In my view, in order to circumvent the said directions, these four noticees used the trading noticees (namely Jigar Praful Ghoghari, Kiran Bhiku Bhanaes, Janak Chimanlal Dave, Jinal Apurval Rawal, Dilipkumar Pukhraj Jain, Bhupesh Harischandra Rathod, Kishan Balaram Shigvan, Kiran Madhusudan Sheth and Jatin Shah) as front entities to trade in the three scrips. This is nothing but indirectly dealing in securities in contravention to the SEBI direction and trading entities allowed themselves to be used by the four entities.

20. In the SCN, it is also alleged that Noticees executed synchronized trades, self-trades and reversal trades amongst themselves, which resulted in creation of artificial volume in the market. Further Noticees also significantly influenced the price in the scrips by contributing to positive Last Traded Price (LTP). In response to the same, all the noticees have relied upon the recommendations of the investigating officer in which he had at some instance recommended that no adverse inference should be drawn for some trades carried out by the noticees. I note that in the Addendum to the investigation report, the investigating officer has recommended that no action has been proposed against noticees in the scrip of KGN. Apart from the instances quoted by the noticees, investigation report also contains the following observations:- In the scrip of Gemstone-  Clients Jigar Ghogari, Dilip Jain, Kiran Bhanaes, Jinal Rawal and Kishan Shigvan created artificial volume in the scrip by way of reversal trades and synchronized trades. In the scrip of PIL-  It was observed that Jigar Ghogari, Dilip Jain, Jinal Rawal, Kishan Shigvan, Kiran Bhikhu Bhanaes and Kiran Sheth contributed siginificantly to the creation of artificial volume through synchronized trades.

 It was observed that Jigar Ghogari, Dilip Jain, Jinal Rawal, Kishan Shigvan, Kiran Bhikhu Bhanaes, Bhupesh Rathod, Janak Dave and Kiran Sheth contributed siginificantly to the creation of artificial volume through reversal trades.  During LTP analysis it was observed that Dilip Jain, Kishan Shigvan, Jinal Rawal, Jigar Ghogari, Kiran Bhanaes, Janak Dave, Bhupesh Rathod, Kiran Sheth and Jatin Shah had contributed significantly to the positive LTP in the scrip during investigation period. 21. Therefore, clearly the investigation alleged synchronized and reversal trades in the scrip of Gemstone and synchronised, reversal and LTP manipulation in the scrip of PIL. Thus, investigation report fairly contains both the charges for certain type of manipulations as mentioned above and ‘no adverse inference’ recommendation for certain type of manipulation, like in the scrip of Gemstone “No adverse inference has been drawn based on analysis of Self trades, off market share transfer, First trade, New High Price (NHP), New Low Price (NLP) and Last Traded Price (LTP) against suspected entities”. Thus I do not agree with the submission of the noticees that for executing synchronized and reversal trades, the Investigating officer had also not drawn any adverse inference against them. The specific instances of manipulation in the scrip of Gemstone and Polytex is dealt with in the paragraphs below.

Manipulation in the scrip of Gemstone:- 22. During the period of investigation, BSE Sensex moved from 17392.39 to 19244.42 registering an increase of 1852.03 points (10.65 %), while, the price of the scrip in BSE moved from Rs. 9.10 to Rs. 20.65 registering an increase of Rs. 11.55 (126.92%). The scrip closed at Rs. 0.38 at BSE on January 19, 2015. During the investigation period, Dilipkumar Jain, had highest contribution of 15.92% in gross buy side and 16.06% in gross sell side. The noticees had bought 56.98% of the market volume and sold 45.52% of the market volume. From the SCN, it is observed that the trading noticees’ carried out synchronized trades upto 20.92% of the traded quantity among themselves which was 6.32% of the total market volume and LTP contribution by synchronized trades was Rs. 4.11. The following trade details shows the data on the total trades and synchronized trades by the suspected entities. Table 4 Gross Buy Gross Sell Gross Total Total Sync Sync Trades Sync Sum Qty of Qty of Traded Traded as % of Trades of Noticees Noticees Qty Qty by total traded as % of LTP among the Noticees Qty among total at Noticees the market sync Noticees volume trades 5,87,02,907 4,68,90,862 10,55,93,769 3,11,59,239 6,519,033 20.92 6.32 4.11

23. Thus it is alleged in the SCN that Noticees had executed synchronized trades amongst themselves which resulted in creation of artificial volume in the market. Taking into account the creation of artificial volume of more than 1% of market volume as buyer and/or seller with each other, following five entities have been shortlisted in the SCN; 1) Dilip Jain, 2) Kiran Bhanaes, 3) Kishan Shigvan, 4) Jigar Ghoghari and 5) Jinal Rawal: Table 5 Sum of % of Buy Client LTP No. of Synchroni No of Sell Client Name Synchronized Name diff. Trades zed Qty. days Vol. to Mkt. Vol. (INR) Kiran Bhanaes Dilipkumar Jain 0.2 33 1097363 1.065 9 Jigar Ghoghari Dilipkumar Jain -0.34 30 658776 0.639 15 Kiran Bhanaes Kishan Shigvan 0.65 22 540500 0.524 5 Kiran Sheth Kishan Shigvan -0.3 15 463105 0.449 6 Dilipkumar Jain Jigar Ghoghari 0.55 16 419893 0.407 7 Jigar Ghoghari Kiran Bhanaes 0.3 13 292000 0.283 4 Kiran Bhanaes Jigar Ghoghari 0 15 257100 0.249 3 Rawal Jinal Kishan Shigvan 0 9 238327 0.231 6 Kishan Shigvan Rawal Jinal 0.9 11 234210 0.227 5 Dilipkumar Jain Janak Dave 0.2 7 223145 0.217 5 Dilipkumar Jain Kiran Sheth 0.05 6 191362 0.186 3 Kishan Shigvan Kiran Bhanaes 0.75 7 187300 0.182 3 Rawal Jinal Kiran Bhanaes 0.1 6 181206 0.176 2 Jigar Ghoghari Kishan Shigvan 0 10 178774 0.173 3 Kishan Shigvan Dilipkumar Jain 0.1 12 161891 0.157 4 Rawal Jinal Jigar Ghoghari 0.15 7 160000 0.155 3 Rawal Jinal Dilipkumar Jain 0.05 12 152529 0.148 8 Kiran Sheth Dilipkumar Jain -0.25 4 127000 0.123 2 Kishan Shigvan Jigar Ghoghari 0.2 6 121500 0.118 2 Dilipkumar Jain Kiran Bhanaes -0.1 6 105000 0.102 2 Janak Dave Kiran Bhanaes 0.05 5 87500 0.085 3 Rawal Jinal Janak Dave 0 7 80500 0.078 1 Dilipkumar Jain Kishan Shigvan 0.2 5 72745 0.071 4 Janak Dave Jigar Ghoghari 0.15 3 68475 0.066 1 Jatin Shah Dilipkumar Jain 0 1 50000 0.049 1 Janak Dave Dilipkumar Jain 0.2 2 40000 0.039 1 Kiran Bhanaes Rawal Jinal 0 1 28300 0.027 1 Bhupesh Rathod Dilipkumar Jain 0 2 25402 0.025 2 Kishan Shigvan Janak Dave 0.1 2 25100 0.024 1 Kiran Sheth Kiran Bhanaes 0 1 18755 0.018 1 Kiran Sheth Jigar Ghoghari 0.15 1 14900 0.014 1 Rawal Jinal Kiran Sheth 0 1 8875 0.009 1

Kishan Shigvan Kiran Sheth 0 1 5000 0.005 1 Bhupesh Rathod Rawal Jinal 0.05 1 1000 0.001 1 Kishan Shigvan Bhupesh Rathod 0 1 1500 0.001 1 Total 4.11 281 6519033 6.323 118

24. It is also revealed that suspected entities had executed reversal trades amongst themselves which resulted in creation of artificial volume in the market. Taking into account the creation of artificial volume of more than 2% of market volume as buyer and/or seller with each other, following entities have been shortlisted; 1) Dilip Jain, 2) Kiran Bhanaes, 3) Kishan Shigvan, 4) Jigar Ghoghari and 5) Jinal Rawal :-

Table 6

Entity (1) Entity (2) Entity (1) Entity (1) Reversal % of No. of sell to Entity buy to Qty reversa Instanc (2) buy Entity (2) l Qty es sell w.r.t. mkt vol Jigar Ghogari Dilip Jain 2,032,081 2,259,923 2032081 1.97 129 Jigar Ghogari Bhupesh 78,698 99,500 78698 0.08 17 Rathod Jigar Ghogari Jatin Shah 199,389 51,500 51500 0.05 3 Jigar Ghogari Janak Dave 70,000 155,090 70000 0.07 7 Jigar Ghogari Kiran Sheth 174,300 118,380 118380 0.11 9 Jigar Ghogari Kiran Bhanaes 770,938 778,074 770938 0.75 60 Jigar Ghogari Jinal Rawal 1,422,061 897,828 897828 0.87 54 Jigar Ghogari Kishan Shigvan 451,240 577,174 451240 0.44 35 Dilip Jain Bhupesh 455,135 263,565 263565 0.26 37 Rathod Dilip Jain Jatin Shah 1,452,459 571,099 571099 0.55 37 Dilip Jain Janak Dave 558,816 455,684 455684 0.44 28 Dilip Jain Kiran Sheth 612,620 551,221 551221 0.53 54 Dilip Jain Kiran Bhanaes 2,057,834 1,135,168 1135168 1.10 66 Dilip Jain Jinal Rawal 1,381,498 1,171,422 1171422 1.14 79 Dilip Jain Kishan Shigvan 552,452 368,024 368024 0.36 41 Bhupesh Jatin Shah 133,000 214,155 133,000 0.13 8 Rathod Bhupesh Jinal Rawal 203,691 102,803 102,803 0.10 18 Rathod

Bhupesh Kishan Shigvan 63,088 33,000 33,000 0.03 6 Rathod Jatin Shah Jinal Rawal 550 98,750 550 0.00 2 Janak Dave Kiran Sheth 11,600 56,000 11600 0.01 4 Janak Dave Kiran Bhanaes 100,000 491,608 100000 0.10 6 Janak Dave Jinal Rawal 153,500 195,159 153500 0.15 12 Janak Dave Kishan Shigvan 25,100 81,000 25100 0.02 2 Kiran Sheth Kiran Bhanaes 68,968 94,755 68968 0.07 9 Kiran Sheth Jinal Rawal 485,216 160,093 160093 0.16 25 Kiran Sheth Kishan Shigvan 344,810 1,146,636 344810 0.33 29 Kiran Jinal Rawal 707,580 525,915 525915 0.51 16 Bhanaes Kiran Kishan Shigvan 375,302 706,000 375302 0.36 48 Bhanaes Jinal Rawal Kishan Shigvan 1,098,796 1,079,137 1,079,137 1.05 61 Total 16,040,722 14,438,663 12,100,626 11.74 902

25. The facts and figures shown above indicate that connected ‘trading noticees’ have carried out synchronized and reversal trades resulting in creation of artificial volumes in the market along with LTP contribution in the scrip of Gemstone. No defence has been advanced against these charges by the noticees.

Manipulation in the scrip of Polytex :-

26. From the SCN, it is noted that during the investigation period top 10 buy clients contributed 74.07% of total market volume on buy side and 73.74% on sell side out of which 69.82% and 71.78% respectively was contributed by the suspected entities. The suspected entities had bought 71.50% of the total market volume while they sold 71.77%

27. The synchronized trades executed by suspected entities was 10.39% of the quantity traded among themselves which was 6.01% of the total market volume. LTP contribution by synchronized trades was Rs. 22.55. Table below shows the information regarding synchronized trades.

Table 7 Gross Buy Gross Sell Gross Total Sync Sync Sync Sum Qty of Qty of Total Traded Traded Trades as Trades of Suspected Suspecte Qty among Qty by % of total as % of LTP Entities d Entities the suspect traded total at suspected ed Qty market sync entities entities among volum trades the e suspecte d entities

12572948 12620917 25193865 10,168,823 1057537 10.39 6.01 22.55

28. Further, during the investigation period, BSE Sensex moved from 17094.51 to 19244.42 registering an increase of 2149.91 points (12.58 %), while price of the scrip in BSE moved from Rs. 136.50 to Rs.281 registering an increase of Rs. 144.50 (105.86%). The scrip closed at Rs. 6.53 in BSE on January 20, 2015. Investigation revealed that suspected entities had executed synchronized trades amongst themselves which resulted in creation of artificial volume in the market. Taking into account the creation of artificial volume of substantial part of the market volume (i.e. more than 6 % ) as buyer and/or seller with each other, following six entities have been shortlisted in the SCN; 1) Dilip Jain, 2) Kiran Bhanaes, 3) Kishan Shigvan, 4) Jigar Ghoghari, 5) Kiran Sheth and 6) Jinal Rawal:

Table 8

Sum No. % of of Synchro Buy Client of Synchroni No of Sell Client Name LTP nized Name Trade zed Vol. to days diff. Qty. s Mkt. Vol. (INR) Jigar Ghoghari Dilipkumar Jain 1.1 20 91457 0.52 14 Dilipkumar Jain Rawal Jinal 1.2 13 71155 0.405 10 Dilipkumar Jain Jigar Ghoghari 1.85 16 70390 0.4 14 Dilipkumar Jain Kiran Bhanaes -3.15 18 67711 0.385 13 Rawal Jinal Dilipkumar Jain 2.55 32 51140 0.291 15 Kiran Bhanaes Dilipkumar Jain -0.95 18 44640 0.254 12 Bhupesh Rathod Kiran Sheth 0.05 14 43970 0.25 3 Dilipkumar Jain Kishan Shigvan 0.1 15 39398 0.224 7 Jigar Ghoghari Kishan Shigvan 0.1 11 38880 0.221 7 Kiran Sheth Bhupesh Rathod 1.85 13 36870 0.21 3

Kishan Shigvan Jigar Ghoghari 1.5 12 36203 0.206 8 Rawal Jinal Kishan Shigvan -1.1 9 34051 0.194 6 Kiran Bhanaes Kishan Shigvan -0.8 22 30794 0.175 8 Rawal Jinal Jigar Ghoghari -1.1 9 28793 0.164 4 Kishan Shigvan Rawal Jinal 6.2 10 26067 0.148 7 Kishan Shigvan Kiran Sheth 3.95 11 24909 0.142 7 Kishan Shigvan Dilipkumar Jain -0.7 7 24250 0.138 5 Janak Dave Dilipkumar Jain -0.05 5 22271 0.127 4 Rawal Jinal Kiran Sheth 1.3 7 21350 0.121 3 Jigar Ghoghari Rawal Jinal 1.95 5 21050 0.12 3 Dilipkumar Jain Kiran Sheth 0.85 8 19943 0.113 6 Dilipkumar Jain Janak Dave 0.3 7 18624 0.106 7 Kiran Bhanaes Jigar Ghoghari 2.05 6 17796 0.101 4 Kishan Shigvan Kiran Bhanaes -1.25 8 16800 0.096 6 Kiran Sheth Kishan Shigvan -0.05 4 15249 0.087 4 Kiran Sheth Dilipkumar Jain 0.25 4 14250 0.081 4 Rawal Jinal Janak Dave 1 2 11000 0.063 2 Jigar Ghoghari Bhupesh Rathod 1.15 3 10800 0.061 2 Bhupesh Rathod Dilipkumar Jain -0.2 4 10107 0.057 4 Kiran Sheth Rawal Jinal 0.15 2 9550 0.054 2 Jigar Ghoghari Janak Dave 0.25 2 9250 0.053 2 Kishan Shigvan Janak Dave -0.5 3 9034 0.051 3 Jigar Ghoghari Kiran Bhanaes 1 3 7735 0.044 3 Kiran Sheth Jigar Ghoghari 0 2 7433 0.042 2 Dilipkumar Jain Jatin Shah 0 1 6999 0.04 1 Rawal Jinal Kiran Bhanaes -0.3 5 6540 0.037 3 Kiran Bhanaes Kiran Sheth 0.25 3 6385 0.036 3 Kiran Bhanaes Janak Dave 0 2 6092 0.035 2 Kishan Shigvan Kishan Shigvan 1.45 3 5500 0.031 3 Jatin Shah Rawal Apurva 0.45 1 5000 0.028 1 Janak Dave Kiran Bhanaes 0 1 4766 0.027 1 Kiran Bhanaes Rawal Jinal 0 1 3000 0.017 1 Janak Dave Bhupesh Rathod 0.05 2 2300 0.013 1 Rawal Jinal Jatin Shah 0 1 2000 0.011 1 Rawal Jinal Rawal Jinal 0 1 2000 0.011 1 Janak Dave Jigar Ghoghari 0 1 1835 0.01 1 Janak Dave Rawal Jinal -0.2 1 1000 0.006 1 Kiran Sheth Janak Dave 0 1 600 0.003 1 Janak Dave Kishan Shigvan 0 1 500 0.003 1 Kishan Shigvan Bhupesh Rathod 0 1 100 0.001 1 Total 22.55 351 1057537 6.01

29. The suspected entities had also executed reversal trades in the scrip of Polytex amongst themselves which resulted in creation of artificial volume in the market. Taking into account the creation of artificial volume of more than 2% of market volume as buyer and/or seller with each other, following entities have been shortlisted; 1) Dilip Jain, 2) Kiran Bhanaes, 3) Kishan Shigvan, 4) Jigar Ghoghari 5) Bhupesh Rathod, 6) Kiran Sheth, 7) Janak Dave and 8) Jinal Rawal. Summary of the reversal trades executed by suspected entities among themselves during investigation period are as under: Table 9 Entity (1) Entity (2) Entity (1) Entity (1) Reversal % of No. of sell to buy to Qty reversal Trades Entity (2) Entity (2) Qty w.r.t. buy sell mkt vol Jigar Ghogari Dilip Jain 519,411 584,300 51941 1 2.95 281 Dilip Jain Jinal Rawal 585,968 506,247 50624 7 2.88 490 Jigar Ghogari Bhupesh 151,282 161,318 15128 2 0.86 93 Rathod Jigar Ghogari Jatin Shah 27,255 5,000 5000 0.03 3 Jigar Ghogari Janak Dave 77,147 92,739 77147 0.44 47 Jigar Ghogari Kiran Sheth 141,288 146,050 14128 8 0.80 82 Jigar Ghogari Kiran Bhanaes 124,617 180,144 12461 7 0.71 77 Jigar Ghogari Jinal Rawal 322,306 220,572 22057 2 1.25 81 Jigar Ghogari Kishan 264,101 278,133 26410 1 1.50 171 Shigvan Dilip Jain Bhupesh 269,475 353,331 26947 5 1.53 204 Rathod Dilip Jain Jatin Shah 76,277 162,982 76277 0.43 33 Dilip jain Janak Dave 143,547 103,016 10301 6 0.59 172 Dilip Jain Kiran Sheth 164,226 142,590 14259 0 0.81 139 Dilip Jain Kiran Bhanaes 250,035 258,226 25003 5 1.42 134 Dilip Jain Kishan 130,215 104,111 10411 1 0.59 110 Shigvan Bhupesh Jatin Shah 65,589 143,107 65589 0.37 57 Rathod Bhupesh Janak Dave 29,970 7,850 7850 0.04 18 Rathod Bhupesh Kiran Sheth 42,250 87,841 42250 0.24 21 Rathod Bhupesh Kiran Bhanaes 79,204 100,760 79204 0.45 50 Rathod Bhupesh Jinal Rawal 213,754 254,405 21375 4 1.22 114 Rathod

Bhupesh Kishan 91,893 74,719 74,719 0.42 54 Rathod Shigvan Jatin Shah Kiran Sheth 25,800 2000 2000 0.01 1 Jatin Shah Kiran Bhanaes 1,721 44,561 1721 0.01 1 Jatin Shah Jinal Rawal 47,256 43,229 43,229 0.25 21 Janak Dave Kiran Sheth 58,218 31,169 31,169 0.18 29 Janak Dave Kiran Bhanaes 85,893 40,629 40,629 0.23 20 Janak Dave Jinal Rawal 69,046 132,382 69046 0.39 44 Janak Dave Kishan 45,516 38,368 38,368 0.22 38 Shigvan Kiran Sheth Kiran Bhanaes 32,563 18,551 18,551 0.11 14 Kiran Sheth Jinal Rawal 254,675 274,465 25467 5 1.45 97 Kiran Sheth Kishan 84,652 130,785 84652 0.48 97 Shigvan Kiran Bhanaes Jinal Rawal 156,400 167,040 15640 0 0.89 101 Kiran Bhanaes Kishan 76,798 99,797 76798 0.44 84 Shigvan Jinal Rawal Kishan 197,264 173,879 173,87 9 0.99 83 Shigvan Total 4,905,612 5,164,296 4,429,652 25.18 3061

30. In the SCN, it is also alleged that the noticees had traded 98,430 shares as self-trades. The investigation period was 9 months (171 trading days), with market volume of 1.75 crore shares. The following table shows the self-trades executed by the suspected entities during investigation period; Table 10 Self % Of Trade No of Self count days on Traded Positive Total Total from which Qty. Net LTP LTP Self Self same self To contributi Contributi Trade Trade termin trades Market on by self on by self Entity name Volume Count al done Vol. trades trades Dilipkumar 10.90 Jain 9795 84 75 17 0.06 -0.2 - Janak Dave 10 1 1 1 - 0 0.10 Jigar Ghoghari 10704 5 0 5 0.06 0.05 0.30 Kiran Bhanaes 9450 6 0 4 0.05 0.3 0.05 Kiran Sheth 14332 6 0 5 0.08 -0.5

Kishan 5.70 Shigvan 14170 14 3 12 0.08 3.65 4.50 Jinal Rawal 39969 13 1 12 0.23 3.65 21.55 Total 98430 129 80 56 0.56 6.95

31. During the investigation period, investigation observed that the suspected entities have contributed 63.47% to the positive LTP of market out of which 18.24% was created by trades amongst themselves: Table 11 All trades LTP Diff. >0 LTP Diff. < 0 LTP Diff. =0 % of positive LTP to Sum No No Total of of LTP of No of Market LTP Sum of trade impac QTY No of LTP QTY trad QTY trade positive Name diff Quantity s t traded trades impact traded es traded s LTP Dilipkum 597.35 933966 738 -587.85 288110 2000 1673704 1841 ar Jain 9.5 2895780 4579 30.59 Kishan 298.65 347736 393 -282.1 136623 1102 621840 799 Shigvan 16.55 1106199 2294 15.30 Rawal 91.7 443289 197 -90.75 259772 157 1390616 834 Jinal 0.95 2093677 1188 4.70 Jigar 78.35 358100 155 -32.45 293481 128 1157942 618 Ghoghari 45.9 1809523 901 4.01 Kiran 58.45 159097 95 -41.2 157585 119 715371 552 Bhanaes 17.25 1032053 766 2.99 Janak 38.3 66695 51 -16.85 83212 52 441521 347 Dave 21.45 591428 450 1.96 Bhupesh 36 214017 108 -34.5 107200 81 937423 762 Rathod 1.5 1258640 951 1.84 Kiran 28.3 193705 70 -30.5 142174 90 1153573 691 Sheth -2.2 1489452 851 1.45 Jatin 12.15 61733 35 -7.2 18691 16 215772 139 Shah 4.95 296196 190 0.62 Total of Suspecte 1239.2 148684 d 115.85 12572948 12170 5 2778338 1842 -1123.4 8 3745 8307762 6583 63.47 Remainin g -1.1 5011853 4504 713.3 1183718 968 -714.4 917404 1046 2910731 2490 36.53 1952.5 240425 Total 114.75 17584801 16674 5 3962056 2810 -1837.8 2 4791 11218493 9073 100

32. Investigation observed that during 01/06/2012 to 20/07/2012, there was a significant price rise in the scrip. Investigation further observed that there was a positive LTP of Rs. 597.85 in market out of which Rs. 337.90 was contributed by the suspected entities. Out of this,

Rs. 118.35 was contributed by suspected entities within themselves. Details of trades of suspected entities who contributed highest LTP during this period is as under: Table 12 No of % of LTP >0 w.r.t. trades LTP > mkt. positive LTP Buyer Seller 0 during patch Dilipkumar Pukhraj Rawal Jinal 41 28.15 4.70 Jain Apurva Dilipkumar 36 14.45 2.41 Rawal Jinal Apurva Pukhraj Jain 33. In response to these charges, all the trading noticees have advanced justification relying on certain parts of the investigation report, wherein the IA has not drawn adverse inference against them. This is completely side-lining the relevant finding of the IA about the synchronised trades and reversal trades in the scrip of Gemstone and synchronised trades, reversal trades, LTP manipulation in the scrip of Polytex. Hence, the argument of the noticees is not acceptable.

34. Regarding the charge of self trade, noticees have relied on SEBI’s internal policy on self-trade dated May 16, 2017 and sought to substantial that the quantum of self-trade is not sufficient to support any enforcement action. I note that the SEBI’s internal policy on self-trade dated May 16, 2017 is for accidental /unintentional self-trades. In the present matter, after considering the fact and circumstances discussed above, I am of the view that the instances of self-trades are not accidental /unintentional self-trades. For example, it is seen from table 10 above that Dilipkumar Jain executed 84 self-trades in 17 trading days for 9,795 shares of Polytex, out of which 75 self-trades were from the same terminal. In my view, this is nothing but intentional creation of artificial volume. Generally, the price and volume of a particular share would be determined by demand and supply of shares in the market. If artificial volume is created through large scale trading amongst a particular group without change in ownership like reversal trades and self-trades, it creates artificial demand leading to prices which are misleading and disadvantageous to the genuine investors in the securities market. In the above two scrips, I find that artificial volume was created by certain connected entities through large scale trading among themselves, without real change in ownership of shares traded among them, for the purpose of increasing volume of trading or influencing the price.

35. The last submission of the noticees is regarding wrong calculation of illegal profit, for the purpose of disgorgement. They have also contended that for calculation of the profit, SEBI moved beyond the investigation period. They have contended that the noticees have actually suffered loss during the investigation period. In this regard, I note from the addendum to the investigation report and the SCN that unlawful/ill-gotten gains in the scrip of Polytex are as follows :-

Table 13 – Profit by individual noticees Entity Name PAN Profit (Amount in Rs.)

Dilipkumar Pukhraj Jain AACPJ5643C 56,04,309 Janak Chimanlal Dave AEPPD9110D 25,30,449 Bhupesh Harishchandra Rathod AACPR3785K 70,14,010 Kishan Balaram Shigvan BAWPS1264D 8,55,116 Kiran Madhusudan Sheth ALJPS1874Q 23,45,508 Jatin Shantilal Shah AACPS6128D 35,72,200 Kiran Bhiku Bhanaes AQUPB0853G 23,13,240 Jigar Prafulchandra Ghoghari ASFPG8598L 63,64,342 Total 3,05,99,174

36. I note that to ascertain the average buy or sell price of individual noticee, the investigation has traversed beyond the Investigation Period, as the same was difficult since buy and sell quantities were not same during the investigation period for individual noticee and therefore cannot be faulted. As far as the loss suffered by noticees during the investigation period is concerned, it is observed from the addendum to the SCN that the noticees had made profit in the scrip of Polytex and loss in the scrip of Gemstone. In my view, the noticees cannot be allowed to set off the losses suffered in one scrip with any other scrip as the same will amount to adjustment of illegal gains against losses suffered while perpetrating the manipulation in one scrip. In my view, in cases involving disgorgement for manipulative trades, loss suffered cannot be allowed to be set off against the gains made in other scrip/s as the object of disgorgement will be defeated. Moreover had the investigation into these scrips been conducted separately, the plea of set-off would not have been available to the Noticees.

37. Further, I noted that some of the Noticees have a past record of securities law violation as they have been found guilty of various violations by SEBI as well as the Hon’ble SAT in matters involving seversal scrips in the past (eg- Indo Pacific Software and Entertainment Limited, Gulshan Polyols Limited, Havells India Ltd. etc.). Thus I am not inclined to consider the submission of Noticees to be bona-fide and credible.

38. Keeping the above in view, I conclude that all the sixteen Noticees have violated Regulations 3(a), (b), (c) and (d) and 4(1), 4(2)(a), (b), (e) and (g) the SEBI PFUTP Regulations and section 12A(a), (b) and (c) of the SEBI Act.

Directions:- 39. Accordingly, in exercise of the powers conferred upon me under section 19 of the SEBI Act, 1992 read with sections 11 and 11B of the SEBI Act, and Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 2003, I hereby pass the following directions:- (i) The Noticees listed hereunder, are restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, from the date of this order, for the period shown in Table below:- S. No. Name Period 1 Jatin Shah 5 year 2 Bhavesh Pabari 7 Year 3 Hemant Sheth 7 Year 4 Prem Parikh 7 Year 5 Ankit Sanchaniya 7 Year (ii) The Noticees listed below, have already undergone debarment for a period of more than 5 years from the date of the interim order:- S. No. Name 1 Jigar Praful Ghogari 2 Kiran Bhiku Bhanaes 3 Janak Chimanlal Dave 4 Dilipkumar Pukhraj Jain 5 Bhupesh Harischandra Rathod 6 Kishan Balaram Shigvan 7 Kiran Madhusudan Sheth

8 Shree Shagun Financial Services 9 Oliwonders Financial Services Pvt. Ltd. 10 Neevan Capital Markets Pvt. Ltd. 11 Jinal Apurval Rawal In view of the same, I do not deem it fit to pass any directions for debarment against the aforesaid 11 noticees, subject to disgorgement direction mentioned below;

(iii) The Noticees, jointly and severally, shall disgorge an amount of ₹ 3,05,99,174, as ascertained in para No. 35 above, along with interest calculated at the rate of 12% per annum from 17 December, 2012 onwards, till the date of payment;

(iv) The Noticees shall remain debarred from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, from the date of this order till the compliance with the direction of disgorgement as directed above;

(v) Noticees shall pay the said amounts within 45 days from the date of this Order either by way of demand draft drawn in favour of “Securities and Exchange Board of India”, payable at Mumbai or by e-payment * to SEBI account as detailed below:

Name of the Branch Name RTGS Code Beneficiary Name Beneficiary Bank Account No. Bank of India Bandra Kurla BKID Securities and 012210210000008 Branch 0000122 Exchange Board of India *Noticees who are making e-payment are advised to forward the details and confirmation of the payments so made to the Enforcement department of SEBI for their records as per the format provided in Annexure A of Press Release No. 131/2016 dated August 09, 2016 which is reproduced as under: 1. Case Name: 2. Name of the payee: 3. Date of payment: 4. Amount paid: 5. Transaction No: 6. Bank Details in which payment is made:

7. Payment is made for: (like penalties/disgorgement/recovery/settlement amount and legal charges along with order details:

40. The above directions shall come into force with immediate effect.

41. A copy of this order shall be served upon the stock exchanges and the depositories for necessary action and compliance.

Date: January 31, 2019 G. MAHALINGAM Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA