Order under Regulation 28(2) read with Regulation 35 of the SEBI (Intermediaries) Regulations, 2008 in respect of Rikhav Securities Ltd. in the matter of IPO of Vaswani Industries Limited.

WTM/SR/IVD/ID- 2/77/04/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI CORAM: S. RAMAN, WHOLE TIME MEMBER ORDER Under Regulation 28(2) read with Regulation 35 of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 in respect of Rikhav Securities Ltd. (PAN-AADCR3067Q and SEBI Registration Nos. INB011280436 -BSE and INB231280430 -NSE) in the matter of IPO of Vaswani Industries Limited.

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI"), vide an interim Order dated July 11, 2011, inter alia, prohibited Rikhav Securities Ltd. (hereinafter referred to as " Rikhav Securities"), who was a sub-syndicate member in respect of the Initial Public Offer (IPO) of the company, Vaswani Industries Ltd. (hereinafter referred to as 'VIL'), from acting as a syndicate member/sub-syndicate member for any future issues till further directions. The said Order was passed on the basis of the prima facie findings that Rikhav Securities had inflated the bid book to a large extent in the IPO of VIL and thus appeared to have induced the investors in the Retail Individual Investor (RII) category to subscribe to the issue.

2. Before dealing with the specific charges alleged against Rikhav Securities, the factual background in the context of which charges have been levelled against it, may be mentioned. VIL came out with an ₹ ₹ IPO for 100 lac equity shares of face value of 10/- each at a premium of 39/- per share. The IPO of VIL was a book-built issue and bidding started on April 29, 2011 and closed on May 3, 2011. The level of subscription for Qualified Institutional Buyers (QIBs), on closure of bids, was at 0.16 times, and oversubscription levels of Non-institutional Investors (NIIs) and RIIs were at 11.29 times and 6.82 times respectively. Based on these figures the oversubscription in the issue was calculated at 4.16 times. However, after taking into consideration, the cheques returned, withdrawals and technical rejections, the oversubscription level fell to 1.28 times. The issue price was fixed at ₹ 49/- and the securities issued through the IPO were allotted to investors on May 10, 2011.

2.1. SEBI received several complaints from applicants pointing out large scale withdrawals/rejections in the issue, alleging that certain applications were submitted only to artificially inflate the subscriptions in QIB/NII/RII categories with a view to attract and mislead investors. Based on such complaints from applicants alleging deliberate huge withdrawals and rejections after the closure of the IPO of VIL, SEBI, vide Order dated May 26, 2011, inter alia directed detailed investigations in the matter. While the investigations were in progress, SEBI passed the aforesaid interim order dated July 11, 2011 inter alia against Rikhav Securities, who was a sub-syndicate member in respect of the IPO of VIL. The said Order also directed VIL to give withdrawal option to all the investors who were allotted shares in the NII and RII categories for such number of shares by which the allotment ratio was impacted due to withdrawals/rejections in the aforesaid categories.

2.2. After completion of investigation in the matter, SEBI initiated Section 11B proceedings against Rikhav Securities. On the basis of findings made in the investigation a SCN dated December 13, 2012 was issued to Rikhav Securities, calling upon them to show cause as to why appropriate action including directions restraining them from buying, selling or dealing in securities for a specified period should not be issued against them. During the intervening period, SEBI also initiated enquiry proceedings against Rikhav Securities under Chapter V of the SEBI (Intermediaries) Regulations, 2008 ("Intermediaries Regulations") and appointed a Designated Authority ("DA") in respect thereof. Both the proceedings are for the violation of the provisions of Section 12A(a), (b), and (c) of the SEBI Act, 1992 and Regulation 3(b) and 3(d), 4(1) and 4(2) (a) and (b) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations") and Clause 6(a) of Schedule XI of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (hereinafter referred to as "ICDR Regulations") by the entity.

3. The main allegations levelled against Rikhav Securities are stated below:

i. Rikhav Securities was one of the largest brokers/sub-syndicate members with respect to bidding in both NII and RII categories, and contributed to about 82% of the issue size.

Withdrawals/rejections from its terminal were as high as 71% of the total issue size. The entire bidding (i.e. 100%) under the NII category and 77% of the bidding under the RII category, from the terminal of Rikhav Securities were withdrawn/rejected.

ii. Majority of the bids received on the first two days i.e. April 29 and May 02, 2011 were either withdrawn/rejected. The NII category contributed to majority of the rejections / withdrawals in the first two days where as the Retail category contributed to the withdrawals / rejections on the third day i.e. May 03, 2011.

iii. Rikhav Securities had acted in concert with their group companies viz. AHL Investment Consultants Pvt. Ltd. and Rikhav Brokers Pvt. Ltd. (presently known as 4G Solutions P. Ltd.) and placed large bids on behalf of them through its terminal under the NII category in order to inflate the bid book; to give a misleading appearance of bidding in the issue and to contribute towards discovering the price at the highest price band of ₹ 49/- per share. It is further alleged that the entire bids placed on behalf of the group companies were subsequently withdrawn.

iv. With respect to 232 bids i.e. 230 bids in the RII category for 903360 shares (9.03% of total issue size) and 2 bids in NII category for 8,16,240 shares (8.16% of total issue size) placed through Rikhav Securities, the cheques submitted along with the bids were not banked. Such huge "not banked"' applications from the terminal of Rikhav Securities contributed 17.2% of the Issue size. Such "not banked" applications were about 26.9% in the entire IPO process. Out of these 230 clients, Rikhav Securities submitted copies of withdrawal letters along with copies of cheques of only 163 clients, but did not furnish copies of the application form. Most of these bids of clients were placed on the last day of bidding particularly, in the last 3 hours and the said cheques of the clients were also dated May 3, 2011. Copy of "Not Banked" details was enclosed along with SCN.

v. Rikhav Securities through its NBFC arm Total Holdings had financed 187 clients belonging to the RII category. These 187 clients had placed their bids through Rikhav Securities and their bids amounted to 7,62,960 shares. With respect to 112 applications, the bids were valid for 4,56,950 shares and with respect to 75 applicants, the bids were invalid for 3,06,010 shares as these bids were withdrawn subsequently. Further, of the above, 137 bids for 5,58,960 shares were placed on May 3, 2011 and of which only 76 bids for 3,10,080 shares were valid.

vi. In view of the above, it was alleged that such bids were made by the Rikhav Securities at the highest price with an intent to raise the price of the Issue at the highest level of price band and hence, were not bonafide in nature, but were done with a motive to artificially inflate the bid book, to show good response in IPO and to create misleading appearance of bidding.

4. The DA submitted the Report on July 11, 2014, recommending the certificate of registration of the Rikhav Securities as stock broker at NSE and BSE be "suspended for a period of two months". The observation made by the DA in the Report are summarized as under:

a. Rikhav Securities had placed large bids through their terminal under the NII category on behalf of its group companies viz. AHL Investment Consultants Pvt. Ltd. (AHL Investments) and Rikhav Brokers Pvt. Ltd. (Rikhav Brokers), presently known as 4G IT Solutions Pvt. Ltd. knowing that the said companies did not have sufficient funds in their respective bank accounts during the time of placing bids. The same was done by Rikhav Securities, in order to inflate the bid book; to give a misleading appearance of bidding in the issue and also to contribute towards discovering the price at the highest price band of ₹ 49/- per share. Placing bids for its two group company/clients accounted for 8.16% of total Public Issue size on the first day of bidding itself (apart from other huge bids made for its NII clients on the first day itself), cannot be termed as miniscule and certainly such percentage is sufficient enough to have impact in the IPO bidding.

b. DA observed that under the NII category, on April 29, 2011 and May 02, 2011, 24.59% and 32.37% to the total bids of the day in IPO were made through Rikhav Securities respectively and the entire 100% of such bids were withdrawn as cheques returned/not banked.

c. The cases wherein the bid applications were not banked at all, Rikhav Securities failed to provide the evidence that it has received the withdrawal applications from all such clients. It is observed from the records that out of 230 instances (under RII category) of not banked applications (contributing 17.2% of the Issue size from the terminal of the Rikhav Securities), they could provide withdrawal application of only 163 applicants wherein the applicants requested Rikhav Securities not to bank their applications. It is admitted by Rikhav Securities that it could give copies of withdrawal letters along with copies of cheques only for 163 clients out of 230 clients. DA observed that sub -syndicate member is required to keep the entire relevant records in respect of its clients for placing as well as for withdrawal of the bids. In view of this, DA rejected the explanation given by Rikhav Securities that such records are not available with them and the same is available with the sub brokers who dealt with the applicants/clients.

d. The bids for 75 applicants/clients which were financed by the NBFC arm of Rikhav Securities, viz. Total Holdings, were also withdrawn.

e. For RII category, 8.42% and 48.75% to the total bids of the day in IPO were made through the terminal of Rikhav Securities on May 02 & 03 of 2011 respectively and out of this, 36.91% and 79.86% of the bids were withdrawn respectively as cheques returned/not banked etc.

f. On the basis of the aforesaid observations, DA concluded that placing first bid on the opening day for huge number of shares for its connected/related clients (group company i.e. Rikhav & AHL) with the knowledge that they are not having sufficient funds and not banking the applications for other clients etc. are definitely not genuine activities, but, were done by Rikhav Securities with an intent to artificially inflate the bid book at the highest price and to create misleading interest for other investors/public to subscribe in the Issue. Therefore, such activities of Rikhav Securities are in contravention of provisions of Section 12 A (a) (b) & (c) of the SEBI Act, Regulation 3 (b) & (d), 4 (1) and 4 (2) (a) & (b) of the PFUTP Regulations.

g. As regards the violation of Clause 6 (a) of Schedule XI of the ICDR Regulations, DA was of the view that the said Clause is applicable to Book Runner/Syndicate Member who appoints a stock broker registered with SEBI (as Rikhav Securities is in the present case) for the purpose of accepting bids, applications and placing orders with the Issuer. A mandate is cast upon the Book Runner/Syndicate Member to ensure that the stock brokers so appointed, are financially capable of honoring their commitments arising out of defaults of their clients/investors. The DA has further observed that under Clause 11 (g) read with Schedule XI of ICDR Regulations, the stock broker is under an obligation to make good the payment in case the client fails to pay for the specified securities allocated as per ICDR Regulations. However, the same is applicable only upon allocation of securities, and not in case of withdrawal/rejection before any allotment.

5. After considering the Report, a post enquiry SCN was issued to Rikhav Securities, on August 5, 2014, calling upon them to show cause as to why action as recommended by the DA should not be taken against them or a higher penalty as deemed fit, should not be imposed upon them. In response to the SCN, Rikhav Securities filed its written submissions dated December 9, 2014, vide letter dated December 10, 2014. An opportunity of personal hearing was granted to Rikhav Securities on December 10, 2014, which was postponed to December 29, 2014, on the request made by Rikhav Securities. The entity reiterated the submissions already made in their earlier reply dated June 13, 2013 (submitted during the personal hearing granted in the aforesaid 11B proceedings on June 13, 2013), and requested time to file additional reply and supporting documents.

5.1. Rikhav Securities vide letter dated January 1, 2015 furnished some documents supporting their contentions and vide letter dated January 12, 2015 filed additional submissions.

6. During the personal hearing held on December 29, 2014, Rikhav Securities inter alia made the following submissions – i. The role of Rikhav Securities, as a sub-syndicate member is limited and falls between the role of Syndicate member and sub-broker in the whole chain of IPO process. It was binding on Rikhav Securities under ICDR Regulations to bid the application as early as possible and is required to carry out the instructions of the applicant(s) scrupulously.

ii. Other than the bids of two group companies of Rikhav Securities namely, AHL Investment Consultants Private Ltd. and Rikhav Brokers Private Ltd., the remaining six bids under the NII category were received through the sub -brokers namely Nikita Manisha Shah and Rahul, who were in no way connected to Rikhav Securities. The contribution of the aforesaid group companies of Rikhav Securities amounted to 1.95% of the total applications bid in the IPO i.e. 4.18 crores, which is a very negligible percentage to induce other investors to apply in the IPO. The group companies withdrew their bids inter alia for the reasons such as, (i) no QIB subscription was received for first two days, (ii) it remained undersubscribed even after the closure of the IPO, (iii) there was another good investment opportunity available in the issue of Power Finance Ltd. In addition to this, negative news in the market and in various websites regarding the large withdrawals by investors etc. also contributed to the withdrawal of applications by the group companies.

iii. In respect of the allegation regarding the failure to bank the cheques, submitted along with the bids, Rikhav Securities submitted that under RII category, 230 applications with cheques were received during 10 a.m. to 2 p.m. on the last day of bidding. As a routine practice, sub brokers who collect applications from the day issue opens, lodge the applications on the last day of the closing of the IPO and applicants put the closing date of the issue on the cheque. Thus, bidding was done during the last hours. Incidentally, since investors wanted to withdraw the applications, which were bid but not banked, they were instructed to give withdrawal letter for the same. This is a prevalent procedure and standard practice adopted by every sub-syndicate member for withdrawal of applications and Rikhav Securities also followed the same practice. Cheques were not banked since all the 230 applicants (RII) had requested in writing to Rikhav Securities for withdrawal of bids. Further, with regard to the non-submission of copies of withdrawal letters along with copies of cheques and application forms of the remaining 69 clients, they submitted that the said copies of withdrawal letters have been forwarded to SEBI vide letter dated December 10, 2014.

iv. No connection was established between the issuer company-VIL, BRLM-Ashika Capital Ltd., NII applicants (Manba Group and other 4 individual applicants) and Rikhav Securities. Investigation by SEBI has given clean chit to the company in its Order dated July 11, 2011. If there were manipulation, the company should be the sole beneficiary.

v. At Para 14 of the SCN, it was stated that only 26 bids were submitted by Rikhav Securities during last two hours and that under no circumstances, bids in last two hours influence others. The bids put in the last 2 hours of bidding could not inflate the bid book or lure others to apply. Further, according to the details of timing of placement of bids, only 26 bids were submitted by Rikhav Securities during last two hours which indicated contradiction in the investigation by SEBI.

vi. In the instant case, as soon as NII and RII applicants discovered that QIB portion was heavily undersubscribed, they rushed to withdraw. Thus, they were not misled to apply but were rather correctly led to withdraw.

vii. In the NII category, five sub -syndicate members, other than Rikhav Securities, namely Karvy Stock Broking Ltd., Ashika Stock Broking Ltd., Enam Securities Pvt. Ltd., Amit Jasani and Matalia Stock Broking Ltd. had 100% bids resulting into invalid applications. Similarly, comparing the ratio of invalid applications by Rikhav Securities in the RII category, Motilal Oswal Securities Ltd. had large number of invalid applications in absolute numbers and KIFS Securities Pvt. Ltd. had higher percentage of invalid applications.

viii. Withdrawal of the 75 applications (out of total 187 applications), financed by Rikhav Securities through its NBFC arm namely Total Holdings and Finvest Pvt. Ltd. were to the extent of about 40% only and withdrawals were at the option and decision of the respective applicants. The company had received about 7500 bids. Therefore, 187 bids could not inflate the order book in any meaningful way.

ix. It is a well settled law that when there is a charge of fraud, mens rea/intention is material. Under the facts and circumstances of the given case, no intention is evident.

x. Alleged contravention of Clause 6 (a) of Schedule XI of SEBI (ICDR) Regulations, 2009 is the obligation of BRLM/Syndicate member. It is a statutory obligation and not transferable and hence Rikhav Securities, as a sub-syndicate member, ought not to have been alleged to have contravened the same.

xi. SEBI has not allowed inspection of certain document, xii. SEBI denied opportunity to cross examine various applicants who bid through Rikhav Securities and their statements were recorded during investigation, xiii. The two group companies of Rikhav Securities were having sufficient sources of funds at the relevant time and the same was communicated along with documentary evidence in the course of investigation.

xiv. Noticee has no prerogative to either accept or reject the application, if it is duly filled.

xv. No connection established between the Noticee and, •••• the issuer company, •••• Merchant Bankers, •••• Syndicate members, •••• Other sub-syndicate members, •••• Client groups.

xvi. As soon as the NII and RIIs learnt that the QIB portion in the IPO of Vaswani Industries Ltd. was undersubscribed (only 8,00,040 shares were subscribed under QIB category against 50,00,000 shares reserved for them in IPO), they rushed to withdraw their applications. This is a common trend in primary market, hence no fault can be attributed to Rikhav Securities.

6.1. In its written submissions dated January 12, 2015, Rikhav Securities inter alia made the following additional submissions:

i. "We were being appointed as sub syndicate members (SSM) and used to enter into agreement with Syndicate Member (SM)

ii. The applications were even withdrawn from the Book Running Lead Manager (BRLM), viz. Ashika Capital, even though they were also Syndicate Member in the said IPO.

iii. The applications filed through us were genuine and bonafide. Withdrawal of applications were made in the interest of Investors /Clients.

iv. A copy of the bank statements of AHL & RBPL have been provided.

v. As regards application made by the group companies viz. Rikhav Brokers Pvt. Ltd and AHL investment Consultants Pvt. Ltd. it is submitted that the size of application amounted to only 1.95% of the total application received in the IPO of VIL and it is very miniscule percentage of applications to induce other investors to apply for the shares in the IPO of VIL. In these companies only directors were common and not shareholders. The said group companies whose applications were bid through us had enough funds at the time of bidding.

vi. They were only collecting agents for the SM and their role is merely to enter the bid details on the terminals wherein the connectivity is provided by the stock exchange.

vii. Regulation 28(3) & 102 read with Schedule XI of SEBI (ICDR) Regulations, 2009 (hereinafter referred to as ‘ICDR Regulations ‘) allows RII category of investors to revise their bids and it is his right to withdraw the application as and when he would like to.

viii. SSM has a ministerial role in the entire IPO operations and when other agencies have been let off, it is difficult to comprehend as to why we are being targeted.

ix. We have neither been provided with copy of the complaints received by SEBI nor provided with an opportunity to cross examine them despite repeatedly being sought by us.

x. The allegation that the bidding done by us in the last two hours have inflated the book is completely erroneous allegation. At the outset we state that in most of the IPO’s majority of bidding is done in the last few hours.

xi. As regards the adjudicating proceedings carried out for other entities in the scrip, the learned AO has held that bids of Noticees which were made only on the last day of IPO that too after 1.30 PM cannot influence other investors to bid in the said IPO. Further, para 24, 25 and 26 the Learned Adjudicating Officer has narrated the grounds and justification to arrive at a conclusion that the withdrawal of the bids by the Noticee therein cannot be considered to have placed in order to create misleading appearance of bids in the IPO by any act/practices/device/artifice and therefore, no contravention of provisions of SEBI Act and PFUTP Regulations is proved against them.

xii. Submitted that in most of the IPO’s the allotment is always done at the highest price.

xiii. In the IPO of VIL withdrawals took place at large through all SSM. The details of such withdrawal through other SSM is given.

xiv. In NII category other than Noticeee, other 5 Sub Synidicate members viz. Karvy Stock Broking Ltd., Ashika Stock Broking Ltd., Enam Securities Pvt. Ltd, Amit Jasani and Matalia Stock broking Ltd had 100% bids resulting into invalid applications. Further on an overall basis in NII category, 93% of the bids were invalid applications. So there was a pattern of invalid applications in NII category in the IPO of VIL.

xv. Similarly in RII category, in comparision to Noticee’s 943 invalid application for 37, 80,720 shares out of 1221 bids for 48,76,680 share (77.53%), 1361 application for 45,89,760 shares were invalid. Similarly, 281 bids for 9,97,560 shares (85.50%) were invalid out of 326 bids for 11,66,880 shares bided by KIFS Securities Pvt. Ltd (KIFS) and 191 bids for 7,56,840 shares (78.11) were invalid out of 243 bids for 9,69,000 shares bided by Shri Parasram Holdings Pvt. Ltd. So comparing ratio of Noticee’s invalid applications in RII category, KIFS and Shri Parasram Holdings Pvt. Ltd. had higher percentage of invalid applications.

xvi. The Sub –Syndicate member or their sub-agents are not required to obtain any certificate of registration with SEBI or any other authorities. In fact Sub-syndicate member is appointed by way of a Private arrangement /agreement between the Syndicate and the Sub-syndicate member.

xvii. As and when the withdrawals were taken place same was in the knowledge of SM/Ashika Capital and it is quite surprising to know despite being overall in charge of the issue process, they did not take any corrective steps.

xviii. SEBI has taken action against the entity for each of the activity that they have been carrying and not debarred all the operations of the entity for violations. In this regard, we would like to bring to your kind notice that Almondz was found guilty in two IPOs simultaneously, then also it was debarred from taking new assignments in the area of merchant banking only and not across their other area of operations.

xix. As per inspection report in respect of Rikhav Securities, there were no major discrepancies except few minor observations in Know your Client (KYC) forms. We submitted our reply to said inspection and pursuant we have not received any observation letter from SEBI.

xx. Further, it is SEBI own case that each activity of the intermediary should be separated by a Chinese wall and this aspect is usually verified by SEBI in its inspection of the intermediaries."

Consideration of Issues and Findings

7. I have considered the findings of DA in the Report and the written submissions/reply filed by Rikhav Securities along with the documents contained therein and the submissions made by the entity during the personal hearing, etc. and other relevant materials available on record.

8. I note that the present proceedings under the Intermediaries Regulations arise out of the same facts and circumstances in which the proceedings under Section 11 and 11B of the SEBI Act were initiated and concluded. I note that in the 11B proceedings, Rikhav Securities was given opportunity of hearing on June 13, 2013 and also on December 29, 2014. Rikhav Securities had submitted common submissions for both 11B and enquiry proceedings initiated against them during the hearing held on December 29, 2014. It is also relevant to note that most of the relevant documents have been furnished by Rikhav Securities after the post enquiry SCN was issued against the entity.

9. The proceedings initiated against Rikhav Securities under Sections 11 and 11B of the SEBI Act, 1992 has been concluded by me, vide Order dated March 13, 2015 restraining them from acting as syndicate/sub-syndicate member for four years for the violation of the provisions of Section 12 A (a) (b) & (c) of the SEBI Act, Regulation 3 (b) & (d), 4 (1) and 4 (2) (a) & (b) of the PFUTP Regulations. A detailed findings on the charges alleged against Rikhav Securities in the 11B proceedings have been given after considering the oral submissions made by the entity during the hearing held on June 13, 2013 and December 29, 2014 and also the written submissions/reply filed by the entity on June 13, 2013, December 9, 2014, January 1, 2015 and January 12, 2015. In the present proceedings also, as observed earlier, an opportunity of being heard has been provided to Rikhav Securities in accordance with Section 12(3) of the SEBI Act read with Regulation 28 of the Intermediaries Regulations. Rikhav Securities filed their written submissions in these proceedings on the same lines as in the proceedings initiated under Section 11 and 11B of the SEBI Act.

9.1. Rikhav Securities, during the hearing held on December 29, 2014 submitted that SEBI has not allowed inspection of some documents and has not allowed cross examination of various applicants who bid through Rikhav Securities and their statements were recorded during investigation. Rikhav Securities also requested for cross examination of the applicants who bid through Rikhav Securities. In this regard, it is observed from the available records, that Rikhav Securities was granted inspection of documents on November 07, 2014 and November 10, 2014 and all the materials relied upon by SEBI have been provided to the entity. Further, in respect of the contention that opportunity to cross examine was not given, it is observed that SEBI has not relied upon statements of any person or entity in the proceedings against Rikhav Securities. In view of this, I am of the opinion that the issue of cross-examination does not arise in the instant matter. It is also pertinent to note that ample opportunities have been granted to Rikhav Securities to adduce evidence in the matter. Most of the relevant documents such as the withdrawal letters of all the 230 applicants etc. have been furnished by Rikhav Securities only after receipt of the SCN in respect of the enquiry proceedings initiated against Rikhav Securities.

9.2. Further, with regard to the contention put forth by Rikhav Securities in respect of the requirement of mens rea, it is observed that fraudulent or manipulative trade practices in securities market can be proved on the basis of "preponderance of probability" and not "beyond reasonable doubt" as held by the Hon'ble Securities Appellate Tribunal (SAT) in Kanchan Gaurav Raimalani v A.O., SEBI, Mumbai, decided on January 5, 2010 and Prashant J. Patel, Mumbai v. SEBI, decided on August 17, 2010. The Hon'ble SAT further observed that, proof of mens rea in manipulation cases need not be direct, but rather may be inferred from circumstantial evidence and is generally based on a course of conduct showing an intentional interference with the normal functioning of the securities market and not based on a solitary action.

9.3. As has been discussed in the Order dated March 13, 2015, the proof of manipulative intent is evident from the series of activities of Rikhav Securities and disclose a clear manipulative conduct, such as placing bids on behalf of Rikhav Securities' own group companies at highest price band and then withdrawing/cancelling the entire bids under the NII category; arranging the finance and controlling of bids placed by RII clients and subsequent withdrawal/rejection of a substantial portion of the bids, etc. It is noted that in the IPO of VIL, the oversubscription level on closure of bids was initially at a level of 4.16 times, however, after taking into account the withdrawals and technical rejections, the oversubscription level fell to 1.28 times. In these circumstances and applying the aforesaid principles, I am of the view that all the charges against Rikhav Securities are established.

10. The instant proceedings initiated against the entity under Section 12 (3) of the SEBI Act, 1992 and Regulation 28(2) of the Intermediaries Regulations are mainly disciplinary proceedings initiated against intermediaries registered with SEBI. As has been observed in the forgoing paragraphs, the present proceedings arise out of the same facts and circumstances in which the proceedings under Section 11 and 11B of the SEBI Act were initiated and concluded, restraining Rikhav Securities from acting as syndicate/sub-syndicate member for a period of four years. In the present proceedings, DA has given recommendation to suspend the certificate of registration of Rikhav Securities as stock broker at NSE and BSE for a period of two months. Rikhav Securities in their reply vide letter dated January 12, 2015 stated that SEBI, vide Order dated July 11, 2011 debarred them from acting as syndicate and sub-syndicate member and they are undergoing the debarment for the last three and a half years. It was further submitted that inspection conducted by SEBI in respect of the broking operations of Rikhav Securities did not observe any major discrepancies. They also contended that SEBI has taken action against entities for the violations committed by them in respect a particular business activity and not in respect of all the business operations of the entities.

11. The charges established against the Rikhav Securities (a SEBI registered stock broker) in both 11B and enquiry proceedings are in respect of their activities as a sub-syndicate member. The charges are that, while acting in the capacity of a sub-syndicate member, they were found to have been instrumental in inflating the bid book without actual inflow of funds from the applications bid through their terminal and with the sole intention to falsely show a good response to the IPO, thereby violating the provisions of Section 12 A (a) (b) & (c) of the SEBI Act and Regulation 3 (b) & (d), 4 (1) and 4 (2) (a) & (b) of the PFUTP Regulations. I have considered all the facts and circumstances which are the basis of instant proceedings and have given my findings thereon in the Order dated March 13, 2015 (referred in Paragraph No.9 above) passed against Rikhav Securities under Section 11 and 11B of the SEBI Act. In the aforesaid Order dated March 13, 2015, I have held that the activities of Rikhav Securities, such as placing bids on the on the first day of the issue by its own group companies, without having sufficient funds available in their respective accounts, arranging funds through its NBFC arm for 187 clients who had placed bids under RII category, without any formal agreement, of which 75 applications were withdrawn subsequently, were all evidently instrumental in inflating the bid book without any actual inflow of funds from those applications and with the sole intention to show a good response to the IPO. As an interim measure to protect the interests of investors, SEBI had vide interim order dated July 11, 2011 restrained Rikhav Securities from acting as syndicate/sub-syndicate member till further Orders. SEBI, vide final Order dated March13, 2015 restrained Rikhav Securities from acting as syndicate/sub-syndicate member for a period of four years. (The period of prohibition already undergone by Rikhav Securities in terms of the aforesaid Interim Order dated July 11, 2011, was also to be taken into account for the purpose of computing the four year period of prohibition as directed in the order dated March 13 2015). My findings in the instant proceedings also remain the same.

12. Under the facts and circumstances of the case as discussed above and also considering that Rikhav Securities presently is undergoing the prohibition to act as a syndicate/sub-syndicate member since July 11, 2011, I am of the considered view that no further direction needs to be issued in these proceedings.

13. The show cause notice dated August 5, 2014 is accordingly disposed of.

Place: Mumbai S. RAMAN Date: April 06, 2015 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA