Order in the matter of Radford Global Ltd. in respect of Mr Jayesh N Kesharia
- Order No.WTM/RKA/ISD/149/2015
Ratio decidendi
The rule this decision rests on
Where an ex parte interim direction restrains a person from the securities market, its continuation requires sufficient material, at that interim stage, attributing to him a role in the alleged manipulative scheme. Absent such material, the direction is to be revoked. The facts of each case must be examined holistically. The fact that a buyer's orders were placed in a scrip where demand was created artificially does not by itself establish his participation, and the buyer's role is not to be excluded out of hand. On the facts found, a noticee who has no connection with the company, its promoters or directors, or the other entities named in the interim order, who placed buy orders in response to apparent demand, whose purchases were a small fraction of the traded volume, who bought from his own funds, and who earned a modest profit, is not attributed a role in the scheme, and the restraint against him is revoked.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Appearance : Jayesh Narendra Kesharia - In a person 1. Securities and Exchange Board of India (SEBI), vide an ad interim ex-parte order dated December 19, 2014 (hereinafter referred to as “interim order”) restrained Radford Global Limited (Formerly known as "P S Global Ltd.") (hereinafter referred to as "Radford" or "the company") and 107 other entities including Mr. Jayesh Narendra Kesharia (hereinafter referred to as "the Noticee") from accessing the securities market and further prohibited them from buying, selling or dealing in securities in any manner whatsoever, till further directions.
2. During the period February 27, 2012 to January 28, 2013 ("Pre-Patch-I") the share price of Radford increased from `3.20 and closed at a high of `241.35 with an average volume of 98 shares per day in 121 trading days with an average of 1.6 trades per day. There was price rise of almost 7442% in the scrip during Pre-Patch-I. The interim order was passed against the Noticee with respect to his trading in Pre-Patch I, out of his total on 8 trades as described in the interim order. 3. Pursuant to the interim order, Mr. Jayesh Kesharia herein filed his replies and availed opportunities of personal hearings on March 19, 2015. He also filed additional written submissions after personal hearings in the matter.
4. The Noticees made his submissions vide letter dated January 1, 2015, January 15, 2015, April 07, 2015 and June 11, 2015 with reminders and made arguments on the same lines during the personal hearing on March 19, 2015. The replies/submission of his is inter alia summarised as under: (1) He is not related with any of the entities mentioned in the order and more so with alleged other suspects. (2) His livelihood only by carrying day-trades (very rarely), short-term investment (almost always) and long-term investment (occasionally). He has no other business or occupation. He has done extensive trading in various scrips. (3) He is investing mainly in "B" group and "T" group securities and as and when he feels that the scrip has reached the possible higher rate he sells the same. (4) The trades in the scrip of Radford Global Ltd. were carried out by him based on his research, and nobody suggested him to deal in the scrip.He has purchased a meager quantity i.e. 184 shares over a period of 6 months in Pre-patch I which could not have influenced the market in any way. The transactions carried out by him are purely delivery based, and out of his own funds.
(5) He has earned a Short Term Capital Gain of `19,861.20 which negligible as compared to the profits earned by other entities including preferential entities. He used to put buy order of much higher quantity and actually got only miniscule quantity. All purchases were from market. He has not purchased shares in the examination period. His transaction in said scrip was only around 0.0004% of his total transactions. No third party funds were involved in transactions in the said scrip. (6) He brought to notice that looking to his trading pattern certain queries were raised by BSE and his broker had replied the same and also vide letter dated 14/06/2014 and 21/06/2012 addressed to BSE and SEBI regarding whether they should allow the said client to continue his trades in the scrips in "B" and "T" group securities, which are generally in circuit. Despite receipt of the said letters, neither the BSE nor SEBI had raised any objection to his trading activity. 5. I have carefully considered the allegations and the submissions of the Noticee herein and have perused the relevant documents and material available on record. I note that the limited issue to be considered, in view of submissions made by the Noticees and in the facts and circumstances so far brought on record in the instant case, is as to whether the direction in the interim order qua the notices need to be continued, revoked or modified in any manner.
6. It is noted that the Noticee has purchased 184 shares of Radford over a period of 6 months. The details of orders kept such as buy quantity, time of the order, shares actually traded are given hereunder:
TRADE_ TRADE_ BUY TRADE TRADE_ ORDER_ BUY CP_ORDER_ RATE DATE TIME QTY QTY VALUE TIME SELL TIME 25/06/2012 12.57.54.47 5000 1 7.95 7.95 09:15:00.04 B 12:57:54.42 27/06/2012 15.11.24.51 1 8.75 8.75 09:15:00.07 B 15:11:24.50 27/06/2012 15.11.27.72 4999 1 8.75 8.75 09:15:00.07 B 15:11:27.67 27/06/2012 15.11.30.79 1 8.75 8.75 09:15:00.07 B 15:11:30.73
24/09/2012 15.29.39.33 500 1 39.85 39.85 09:15:00.04 B 15:29:39.26 05/11/2012 10.01.23.54 495 50 56.35 2817.5 09:15:00.03 B 10:01:23.53 08/11/2012 14.43.22.31 445 4 59.15 236.6 09:15:00.03 B 14:43:22.25 18/12/2012 15.24.06.14 100 5 141.9 709.5 09:15:00.10 B 15:24:06.12 21/12/2012 12.14.56.61 95 20 150.5 3010 09:15:00.04 B 12:14:56.55 23/01/2013 09.42.07.49 5 227.5 1137.5 09:15:00.10 B 09:42:07.41 100 23/01/2013 11.47.00.13 95 227.5 21612.5 09:15:00.10 B 11:47:00.09 Total 184 29606
7. The Noticee had put buy order of much higher quantity at upper circuit at the beginning of the market i.e. 9.15 am and the same were executed much later that too at different time. He actually got only miniscule quantity. All purchases were from market. It is also observed from the below table that the Noticee had several other orders that were not executed at all:
ORDER_DATE ORDER_TIME RATE QTY 26/06/2012 09:15:00.063556 8.33 4999 02/07/2012 09:15:00.038542 10.10 4995 20/09/2012 09:15:00.052133 37.25 500 21/09/2012 09:15:00.120502 39.10 500 26/09/2012 09:15:00.049443 41.39 500 28/09/2012 09:15:00.435690 42.20 499 01/10/2012 09:15:00.040805 43 499 26/10/2012 09:15:00.627115 55.25 495 29/10/2012 09:15:00.383150 55.25 495 30/10/2012 09:15:00.053526 55.25 495 31/10/2012 09:15:00.047344 55.25 495 01/11/2012 09:15:05.576888 55.25 495 02/11/2012 09:15:00.049434 56.35 495 06/11/2012 09:15:00.041266 57.45 445 07/11/2012 09:15:00.056179 59.14 445 21/01/2013 09:15:00.112088 218.69 50 22/01/2013 09:15:00.127547 223.05 100
8. As noted in the interim order, during the examination period an artificial demand for the shares of Radford was created though it did not have the fundamentals to command such a high demand nor were there any external factors such as corporate announcements which could have led to such demand. From the trading behaviour shown in this case it is noted that despite there being a huge demand for the shares of Radford the sellers sold shares in miniscule quantities on various occasions and thereby controlled the supply of shares. Such selling behaviour also exhibit suspicious trading in spite of a huge demand for the shares. Although the role of buyers in creating such demand cannot be out rightly ignored, the facts and circumstances of each case need to be holistically examined. In this case, from the material available on record, I note that the Noticee is not connected / related to the company or its promoters or directors or with any entities mentioned in the interim order. The Noticee has demonstrated that he had placed the buy orders seeing huge demands on previous trading day as against thin volume traded and purchase quantity was always far less than the traded volume. Further, he had placed impugned orders in the scrip without foreseeing any manipulation or being a party to the scheme described in the interim order. He has also demonstrated that he had purchased only 184 shares out of his own funds through 8 instances of trades without being party to the scheme in question. Out of his trades he had earned as meagre profit of `19,861.20. I do not find sufficient material at this stage to attribute role of the Noticee in the dubious plan, scheme or devices and to continue the directions issued in the interim order against the Noticee. 9. Considering facts and circumstances of this case, I hereby direct that the directions issued against the Noticee stand revoked. 10. A copy of this order shall be served on all recognized stock exchanges and depositories to ensure compliance with above directions.
Sd/-
DATE: November 10th, 2015 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA
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