BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. ASK/AO/97-99/2014-15]
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD
OF INDIA ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE
FOR

HOLDING

INQUIRY

AND

IMPOSING

PENALTIES

BY

ADJUDICATING OFFICER) RULES, 1995

In respect of
Name of the Entity

PAN

Order No.

Moneybee Securities Pvt. Ltd.

AAACS8061N

ASK/AO-97/2014-15

Dhiren Shah (HUF)

AACHD9901M

ASK/AO-98/2014-15

Yogesh Laxman Rege

AADPR9474Q

ASK/AO-99/2014-15
In the matter of

Trading in the scrip of New Horizon Leasing and Finance Ltd.

BACKGROUND IN BRIEF
1.

Securities and Exchange Board of India (SEBI) conducted investigation

in the scrip of the New Horizon Leasing and Finance Ltd. (hereinafter referred
to as New Horizon) for the period October 06, 2010 to February 04, 2011
(hereinafter referred to as Investigation Period) to ascertain, inter alia,
whether there was any violation of the provisions of Securities and Exchange
Board of India Act, 1992 (hereinafter referred to as " SEBI Act, 1992") and
SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to
Securities Market) Regulations 2003 (hereinafter referred to as "PFUTP
Regulations").
2.

Investigation revealed that there was no trading in the scrip of the New

Horizon prior to investigation period as trading in equity shares of the company

Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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was suspended w.e.f. January 07, 2002 on account of non-payment of annual

listing fees. The suspension was revoked w.e.f October 06, 2010. During the
entire investigation period, the scrip was traded in the price range of ` 50 to `
119.7 with an average volume of 2529 shares on BSE. Post investigation period
i.e. 05.02.2011 to 30.04.2011, the scrip was traded in the price range of ` 95.75
to ` 105.05 with an average volume of 1922 shares on BSE. An analysis of
Trade and Order Log of the scrip during the investigation period, it was
observed that out of 85 trading days during the period of examination, the scrip
was traded only on 34 trading days as there were no sell orders placed in the
system. Further, out of 34 trading days, on 23 trading days, the scrip opened at
a price higher than its previous closing price.
3.

It was observed during investigation that Dhiren Shah (HUF) and

Yogesh Laxman Rege are clients of Trading Member Moneybee Securities Pvt.
Ltd. (hereinafter referred to individually as "Dhiren HUF, Yogesh and
Moneybee" and collectively as "Noticees"). Dhiren Shah is Karta of Dhiren
HUF and is also director of Moneybee. Yogesh is having trading as well as
Portfolio Management Services account with Moneybee.
4.

Investigation revealed that Yogesh and Moneybee had indulged in

synchronized trades (where the buy and sell order quantity and rate were
identical and orders for these transactions were placed within time gap of one
minute) with each other during the investigation period. It was observed that
Moneybee purchased in its proprietary account 19,700 shares in 5 trades and it
was also the counterparty broker in such trades. In all buy trades of Moneybee,
orders were placed at price higher than Last Traded Price (LTP) and all such
trades were synchronized and the counterparty was Yogesh. Its net positive
LTP contribution through such trades was ` 32.3. 3 out of these 5 buy orders
Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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were placed before the sell order contributing LTP of Rs. 19.35 and thereby
increasing the price of the scrip. Further an analysis of first trade in the scrip
revealed that Moneybee contributed net positive LTP of ` 10.05 through first
trades on 2 trading days during the investigation period. It was also observed
that Terminal address of buy terminal and sell terminal was same.
5.

On analysis of buy trades of Yogesh in the scrip of New Horizon during

the investigation period, it was observed that Yogesh entered into 10 buy trades
during the investigation period and 7 such trades were positive LTP trades and
were also first trades. No sell orders were available when such buy orders were
placed. The sell orders for such trades were placed after substantial time gap.
Net LTP and New High Price (NHP) contribution by Yogesh was ` 23.7. In 5
out of 7 positive LTP trades counterparty was Dhiren HUF. From November
03, 2010 to November 18, 2010, Yogesh purchased 500 shares in 5 trades from
Dhiren HUF and thereby contributed Rs. 16.95 to both NHP and LTP.
6.

It was observed on analysis of NHP that Yogesh was the main

contributor to NHP discovery contributing ` 23.7 in 7 trades. All his NHP

trades were also first trades. In 5 out of 7 NHP trades counterparty was Dhiren
HUF. An analysis of LTP revealed that Yogesh's net LTP contribution was `
23.7. All his positive LTP trades were first trades and no sell orders were
available when such buy orders were placed. The sell orders for such trades
were placed after substantial time gap and in 5 out of 7 positive LTP trades
counterparty was Dhiren HUF. Moneybee's net LTP contribution was ` 32.3.
All its trades were positive LTP trades and all such trades were synchronized
and the counterparty was Yogesh.
7.

In view of the above, it was observed that Moneybee and Yogesh have

Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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contributed to price rise and positive LTP through synchronized trades, Yogesh
also contributed in establishing positive LTP and NHP through various trades in
the scrip of New Horizon wherein Dhiren HUF was the counterparty and all the
noticees acted in fraudulent manner and in connivance with each other. It was,
therefore, alleged that the Noticees violated the provisions of section 12A (a),
(b) and (c) of SEBI Act, 1992 and regulations 3(a), (b), (c), (d), 4(1) and 4(2)(e)
of PFUTP Regulations.
APPOINTMENT OF ADJUDICATING OFFICER
8.

The undersigned was appointed as the Adjudicating Officer vide order

dated February 26, 2014 to inquire and adjudge under Section 15HA of the
SEBI Act 1992, the aforesaid alleged violations of provisions of SEBI Act,
1992 and PFUTP Regulations, 2003 by the noticees.
SHOW CAUSE NOTICE, REPLY AND HEARING
9.

Show Cause Notices dated June 25, 2014 (herein after referred to as

SCN) was issued to the Noticees under rule 4 of SEBI (Procedure for
Holding Inquiry and imposing penalties by Adjudicating Officer) Rules, 1995
(hereinafter referred to as Rules) to show cause as to why an inquiry should
not be held against them in terms of rule 4 of the Rules read with section 15I of
SEBI Act, 1992 and penalty be not imposed under section 15HA of SEBI Act,
1992 for the violations specified in the SCN. The copies of the documents
relied upon in the SCN were provided to the Noticees along with the SCN.
10.

Reply of Moneybee: Vide letter dated July 30, 2014 Moneybee filed its

reply to the SCN. The main submissions of Moneybee with respect to specific
charges alleged in the SCN are as follows
i.

The transactions of shares as mentioned in the SCN was not planned

Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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ii.
iii.

iv.

v.

vi.

11.

and there was no unfair means or unfair trade practice to gain the profit
After research of the New Horizon the shares were bought as a part of
investment at the price at which the same were available in the market.
Originally shares were purchased by Mr. Dhiren Shah (Qty 20,000/-),
Dhiren HUF (Qty 20,000/-) and Yogesh (Qty 20,000/-) from the seller
from market. Moneybee acted as broker for the buyers and Enam
Securities acted as a broker for the sellers of these transactions.
Moneybee purchased shares from Yogesh as he wanted to take exit to
maximize profit. Whereas Moneybee had researched and expected a
value unlock in future so it bought the shares at the price at which he
wanted to sell. And hence the same are not synchronized transactions to
manipulate the market. Moneybee had done research in the share and
thought that it would be good investment in long run.
Scrip is not actively traded on the exchange and there is no volume due
to less numbers of buyers/sellers. As our client and Moneybee wanted to
invest in the scrip as the value can be unlocked in future. To get a good
quantity of the shares in the counter our clients were buyer at the price
available. To get the desired quantity clients had to buy the shares at the
best available price. In view of that, the transactions in the scrip cannot
be considered as synchronized transactions.
Different transactions occurred in the inspection period in respect of the
company was inadvertent in nature without any intention to conceal any
gain or any type of advantage from the securities market.
Reply of Dhiren HUF: Vide letter dated August 04, 2014 Dhiren HUF

filed its reply to the SCN. The main submissions of Dhiren HUF with respect to
specific charges alleged in the SCN are as follows:
i.

ii.

iii.

I had bought shares of New Horizon on 29.10.2010 as a part of

investment at the price at which the same were available on the BSE
floor.
These shares were bought on pure research of the company done by me.
As this company had a potential to grow and value would be unlocked
in future.
With respect to price rise, I would like to state that I had bought these
shares from the market and my investment profile is to buy and hold
illiquid scrips which have potential to grow in future. During the
inspection period, I had bought and sold some shares of the company. I
had sold some shares where I saw there was a buyer in the market who
wants to buy, with a view that I might cover the sold shares at lower

Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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iv.

v.

12.

price. My intention was not to manipulate, defraud or to do any unfair

trade practices and it should not be considered as fraudulent activity.
I would also like to inform that being an illiquid scrip there were only
few participant in the trades. My trade details clearly shows that out of
my 17 sell trades during the inspection period for 3,600 shares, only 5
trades for 100 shares each are trades which coincidentally matched
with Yogesh. This shows that there were genuine buyers in the market at
NHP, and I have sold the shares in the market which made LTP as
NHP. My intention was not to contribute to price rise or manipulation.
There was no such pattern on intention to synchronize the trades.
I would also like to state that I was still holding the shares after the
inspection period as I thought that the price would be unlocked in the
future and my intention was not to conceal anything, manipulate and
attain the benefit by doing fraud transactions. I hereby state that there
was no malafide intent while entering into transactions and it should not
be considered as false appearance of trading in securities market.
Reply of Yogesh: Vide letter dated August 05, 2014 Yogesh filed its

reply to the SCN. The main submissions of Yogesh with respect to specific
charges alleged in the SCN are as follows:
i.

ii.

iii.

iv.

13.

I had bought shares of New Horizon on 29.10.2010 as a part of

investment at the price at which the same were available on the BSE
floor.
These shares were bought on pure research of the company shares by
Mr. Dhiren Shah, who briefed me about the company, its financials and
growth potential and on getting convinced I bought the shares.
I had bought these shares from the market at every interval. As I thought
the potential of the scrip to go up was very high, I also kept buy orders
at upper circuit rate so there would be some volume and I would get the
desired quantity. The counter is dry and not many shares are traded, it
does not mean that I have manipulated price.
I had exited the position in the scrip as I had to buy some property so I
started offloading the shares in the market. I started to sell the shares in
the market but due to low volume and few participants, I was not able to
sell all the shares. As I was in urgent need of the money and Mr. Dhiren
Shah was fully convinced in the scrip, I sold the shares to Moneybee
(Promoted by Mr. Dhiren Shah)
In the interest of natural justice and in order to conduct an inquiry in

Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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terms of rule 4(3) of the Rules, the Noticees were granted an opportunity of
personal hearing on August 26, 2014 at SEBI, Head Office, Mumbai, vide
notices dated August 04, 2014. On the scheduled date of hearing, Mr. Akshay
Vora, Compliance Officer and Mr. Dhiren Shah, Managing Director of
Moneybee, appeared as Authorised representatives (ARs) on behalf of
Moneybee and Yogesh while Mr. Dhiren Shah also appeared on behalf of
Dhiren HUF. ARs reiterated the submissions made in their reply to SCN.
CONSIDERATION OF ISSUES AND FINDINGS
14.

The issues that arise for consideration in the present case are :
a) Whether Moneybee and Yogesh have contributed to price rise and
positive LTP through synchronized trades?
b) Whether Yogesh contributed in establishing positive LTP and NHP
through various trades in the scrip of New Horizon wherein Dhiren
HUF was the counterparty?
c) Whether all the noticees have acted in fraudulent manner and in
connivance with each other?
d) Whether the Noticees had violated the provisions of section 12A (a),
(b) and (c) of SEBI Act, 1992 and regulations 3(a), (b), (c), (d), 4(1)
and 4(2)(e) of PFUTP Regulations?
e) Does the violation, if any, on the part of the Noticee attract monetary
penalty under Section 15HA of SEBI Act?
f) If so, what would be the monetary penalty that can be imposed
taking into consideration the factors mentioned in Section 15J of
SEBI Act?

15.

I have taken into consideration the material available on record and the

submissions of the Noticees. Before moving forward, it is pertinent to refer to

Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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the provisions of section 12A (a), (b) and (c) of SEBI Act, 1992 and regulations
3(a), (b), (c), (d), 4(1) and 4(2)(e) of PFUTP Regulations. The said provisions
state as under:
SEBI Act, 1992
"Prohibition of manipulative and deceptive devices, insider trading and
substantial acquisition of securities or control.
12A. No person shall directly or indirectly
(a) use or employ, in connection with the issue, purchase or sale of any
securities listed or proposed to be listed on a recognised stock exchange, any
manipulative or deceptive device or contrivance in contravention of the
provisions of this Act or the rules or the regulations made thereunder;
(b) employ any device, scheme or artifice to defraud in connection with issue or
dealing in securities which are listed or proposed to be listed on a recognised
stock exchange;
(c) engage in any act, practice, course of business which operates or would
operate as fraud or deceit upon any person, in connection with the issue,
dealing in securities which are listed or proposed to be listed on a recognised
stock exchange, in contravention of the provisions of this Act or the rules or the
regulations made thereunder;"
PFUTP Regulations
"3. Prohibition of certain dealings in securities
No person shall directly or indirectly
(a) buy, sell or otherwise deal in securities in a fraudulent manner;
(b) use or employ, in connection with issue, purchase or sale of any security listed
or proposed to be listed in a recognized stock exchange, any manipulative or
deceptive device or contrivance in contravention of the provisions of the Act or the
rules or the regulations made there under;
(c) employ any device, scheme or artifice to defraud in connection with dealing in
or issue of securities which are listed or proposed to be listed on a recognized
stock exchange;
(d) engage in any act, practice, course of business which operates or would
operate as fraud or deceit upon any person in connection with any dealing in or
issue of securities which are listed or proposed to be listed on a recognized stock
exchange in contravention of the provisions of the Act or the rules and the
regulations made there under.
4. Prohibition of manipulative, fraudulent and unfair trade practices
Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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(1) Without prejudice to the provisions of regulation 3, no person shall indulge in

a fraudulent or an unfair trade practice in securities.
(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade
practice if it involves fraud and may include all or any of the following, namely:
(a) ........................
(b) ........................
(c) ........................
(d) ........................
(e) any act or omission amounting to manipulation of the price of a security;"
Issue I. Synchronized trades between Moneybee and Yogesh contributing
to price rise and positive LTP
16.

It was observed during the Investigation that Yogesh and Moneybee

Noticee indulged in synchronized trades with each other. Synchronized trades

of the Yogesh and Moneybee in the tabular form and the observations made
therefrom during investigation is given below:
Sr
No.

TRADE_D
ATE

TRAD
EID

QTY

RATE

LTP
Diff

MEMBE
R_NAME

Client
name

CP_MEM
BER_NA
ME

CP
name

ORDER
_TIME

CP_OR
DER_T
IME

09-12-2010

1002

4700

117

3.25

Moneybee
Securities
Pvt.Ltd.

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

10:50:26
.763684

10:50:20
.714134

10-12-2010

1004

5000

112

9.3

Moneybee
Securities
Pvt.Ltd.

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

11:12:59
.361716

11:13:01
.039373

14-12-2010

1003

5000

111.75

9.7

Moneybee
Securities
Pvt.Ltd.

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

15:19:46
.563553

15:19:46
.395147

15-12-2010

1001

3000

117

5.25

Moneybee
Securities
Pvt.Ltd.

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

11:01:21
.114253

11:01:21
.484994

16-12-2010

1001

2000

111

4.8

Moneybee
Securities
Pvt.Ltd.

Moneybee
Securities
Private
Limited
Moneybee
Securities
Private
Limited
Moneybee
Securities
Private
Limited
Moneybee
Securities
Private
Limited
Moneybee
Securities
Private
Limited

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

15:15:48
.025701

15:15:48
.985839

Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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17.

I note from the above table that Moneybee purchased in its proprietary

account 19,700 shares in 5 trades spanning 5 days. In all the trades Yogesh was
the counterparty and all these trades were executed through Moneybee as a
broker. Further, in all the afore-mentioned trades, the price of the security
punched into the system by Yogesh and Moneybee was the same, the quantity
of the shares to be purchased /sold was also the same and the time at which the
two orders were punched in is almost the same. In a screen based trading
system that is followed in the stock exchanges, it is not possible that such large
number of trades could match without the two clients executing a pre- decided
plan. Therefore, all the aforesaid trades done by Moneybee and Yogesh are
nothing but synchronized trades.
18.

I further note that in all the aforesaid trades, LTP difference was

positive which clearly indicates that orders were placed at price higher than
LTP. Net positive LTP contribution through such trades was ` 32.3. Further, 3
out of these 5 buy orders placed by Moneybee viz. orders at serial no. 2, 4 and 5
in the above table were before the sell order contributing LTP of Rs. 19.35 and
thereby increasing the price of the scrip.
19.

I note from the replies of Yogesh and Moneybee that they have not

disputed the trades and also there is no dispute as to the fact that they are
known to each other. However, while Moneybee has submitted that it
purchased the shares from Yogesh based on its research since Yogesh wanted
to take exit to maximize profit. Yogesh has submitted that he bought the shares
on 29.10.2010 based on pure research of the company's shares by Mr. Dhiren
Shah, who briefed him about the company, its financials and growth potential.
He sold the shares to Moneybee as he was in urgent need of the money and Mr.
Dhiren Shah was fully convinced in the scrip. Thus, it clearly establishes the
Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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fact that the aforesaid trades were executed with prior understanding between
Yogesh and Moneybee.
20.

At this juncture, I would like to quote the order dated June 12, 2008 of

the Honble Securities Appellate Tribunal (SAT) in Appeal No. 175/2007 in the
matter of Chirag Pujara v. Whole Time Member, SEBI wherein it observed that
".......executing matching trades with a prior understanding is by itself a serious
violation of the Regulations which jeopardizes the integrity of the market..."
Here, I would like to also quote the order dated 04.05.2007 of the Honble SAT
in Triumph International Finance India Limited v. SEBI in Appeal No. 35/2002
wherein it observed that ".........A unique feature of the stock exchange is the
anonymity of the buyer and the seller. Unlike other moveable properties, shares
are normally bought and sold buy the unknowns who never get to meet. They
execute the trades through their brokers and the shares are traded at a price
determined by the exchange mechanism based on the demand and supply. It
must not be forgotten that every trade establishes the price of the scrip and
when the two brokers punch in the buy and sell orders simultaneously at a
predetermined price which they fix and match the trades on the screen of the
system they are obviously interfering with the fair price discovery process of
the exchange and this would amount to manipulation and benchmarking the
price. Such trades are prohibited by the unfair trade practices regulations
framed by the Board......."
21.

I find that Yogesh and Moneybee executed the synchronized trades

between them in the scrip of New horizon at a predetermined price away from
the LTP which they fixed between them and matched the trades on the screen of
the system and thereby interfered with the price discovery process of the
exchange and that resulted into contributing to positive LTP. Moreover, the
Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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intention to manipulate the price discovery process of the exchange is also

implicit from the fact that the synchronized trades between them continued for
5 different days and all the trades were executed between them at the prices
higher than the LTP. The above analysis, thus, clearly establishes that Yogesh
and Moneybee indulged in manipulation of the price of the scrip by
benchmarking its price at higher level.
Issue II - Yogesh contributing in establishing positive LTP and NHP
through various trades wherein Dhiren HUF being the counterparty
22.

Buy trades of Yogesh in the tabular form during investigation period is

given below:
Sr
No.

TRADE_D
ATE

TRA
DEID

QTY

RAT
E

LTP
Diff

NH
P
diff

1
29-10-2010

1001

100

52.5

2.5

2.5

2
29-10-2010

1002

900

52.5

3
29-10-2010

1003

4000

52.5

4
29-10-2010

1004

15000

52.5

03-11-2010

1001

100

60.7

2.85

2.85

04-11-2010

1001

100

63.7

05-11-2010

1001

100

66.85

3.15

3.15

MEMBE
R_NAME

client
name

CP_ME
MBER_N
AME

CP name

ORD
ER_T
IME

CP_ORD
ER_TIM
E

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

13:05:01.
694340

Yogesh
Laxman
Rege

09:15:
00.04
6946

13:09:29.
970449

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

09:15:
00.04
6946

13:11:58.
852043

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

Pollachi
Velappanb
hagyam
Arungiri
Pollachi
Velappanb
hagyam
Arungiri
Pollachi
Velappanb
hagyam
Arungiri
Pollachi
Velappanb
hagyam
Arungiri

09:15:
00.04
6946

Moneybee
Securities
Pvt.Ltd.

Enam
Securities
Direct
Pvt.Ltd.
Enam
Securities
Direct
Pvt.Ltd.
Enam
Securities
Direct
Pvt.Ltd.
Enam
Securities
Direct
Pvt.Ltd.

09:15:
00.04
6946

13:14:48.
516556

Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege

Moneybee
Securities
Pvt.Ltd.

Dhiren
Shah
(HUF)

09:15:
00.03
4470

15:08:39.
682373

Moneybee
Securities
Pvt.Ltd.
Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege
Yogesh
Laxman
Rege

Moneybee
Securities
Pvt.Ltd.
Moneybee
Securities
Pvt.Ltd.

Dhiren
Shah
(HUF)
Dhiren
Shah
(HUF)

09:15:
00.02
0749
18:15:
00.01
0005

14:23:55.
256415

Adjudication order in the matter of trading in the scrip of New Horizon Leasing and Finance Ltd.

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18:37:25.
534123

Sr
No.

TRADE_D
ATE

TRA
DEID

QTY

08-11-2010

1001

100

15-11-2010

1001

18-11-2010

1001

RAT
E

LTP
Diff

NH
P
diff

70.15

3.3

3.3

100

89.45

4.25

4.25

100

98.55

4.65

4.65

10

23.

MEMBE
R_NAME

client
name

CP_ME
MBER_N
AME

CP name

ORD
ER_T
IME

CP_ORD
ER_TIM
E

Moneybee
Securities
Pvt.Ltd.
Moneybee
Securities
Pvt.Ltd.
Moneybee
Securities
Pvt.Ltd.

Yogesh
Laxman
Rege
Yogesh
Laxman
Rege
Yogesh
Laxman
Rege

Moneybee
Securities
Pvt.Ltd.
Angel
Broking
Ltd.
Moneybee
Securities
Pvt.Ltd.

Dhiren
Shah
(HUF)
Jayshree
Harshad
Shah
Dhiren
Shah
(HUF)

09:15:
00.02
5282
09:15:
00.03
2855
09:15:
00.07
0663

14:47:19.
862047

I note that Yogesh had executed 5 trades of 100 shares each, as

mentioned at serial no. 5-8 and 10 in the above table, between November 03,
2010 to November 18, 2010 where the counterparty client was Dhiren HUF.
Moneybee was the common broker for all these trades. All these trades were
executed at prices higher than the LTPs thereby establishing NHP. Total
positive contribution to NHP and LTP was `16.95 by such trades.
24.

I note that neither Yogesh nor Dhiren HUF have disputed these trades.

However, while Dhiren HUF had submitted that trades matched with Yogesh
coincidentally, Yogesh submitted that he bought the shares on 29.10.2010
based on pure research of the company shares by Mr. Dhiren Shah, who briefed
him about the company, its financials and growth potential. He further
submitted that he bought these shares from the market at every interval and also
kept buy orders at upper circuit rate so there would be some volume and he
would get the desired quantity.
25.

The submission of Dhiren HUF that trades with Yogesh matched

coincidentally cannot be accepted for the reason that both of them are known to
each other. It is a settled position of law that any transaction executed with the
intention to defeat the market mechanism whether negotiated or not would be
illegal. Whether a transaction has been executed with the intention to
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09:58:18.
105656
14:59:36.
512947

manipulate the market or defeat its mechanism will depend upon the intention
of the parties which could be inferred from the attending circumstances. In the
instant case, I find that both the purchase and sell orders which resulted into
trades were also placed from the same terminal of Moneybee. Moreover, I see
no reason as to why 100 shares each were bought by Yogesh from Dhiren HUF
on 5 different dates and that too at all times orders were placed at prices higher
than LTP establishing NHP. Only explanation for the same is that both Yogesh
and Dhiren HUF intended to induce the trading interest in the scrip by
manipulating its price knowing fully well that each executed trade would
establish a NHP. The same is also evident from the submission of Yogesh that
since the scrip being illiquid he kept the order at upper circuit so that there
would be some volume which clearly reflects their manipulative intent to
induce trading interest in the scrip.
26.

The aforesaid facts and circumstances of the case clearly establish that

these trades were executed with prior understanding between Yogesh and
Dhiren HUF to manipulate the price of the scrip which they successfully
managed also as these trades resulted into positive LTP and NHP to the extent
of `16.95. I am of the view that abusing the market mechanism by executing
matching trades with prior understanding to manipulate the price of the scrip is
a serious violation that jeopardizes the integrity of the market.
Issue III - All noticees acted in fraudulent manner and in connivance with
each other
27.

The proof of fraudulent/manipulative transactions in the circumstances

always depends on inferences drawn from a mass of factual details, the nature
of transactions, conduct of the parties etc. It has already been established in the
preceding paragraphs that all the noticees were known to each other and they
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dealt in the scrip of New Horizon with prior understanding with each other.
Further, Yogesh and Moneybee were found to have executed the synchronized
trades between them in the scrip at a predetermined price away from the LTP
which they fixed between them and matched the trades on the screen of the
system and thereby interfered with the price discovery process of the exchange
which resulted into contributing to positive LTP. Also, Yogesh and Dhiren
HUF were found to have executed various trades with prior understanding on
the screen of the system to manipulate the price of the scrip which they
successfully managed also as these trades resulted into positive LTP and NHP
to the extent of `16.95. Thus, there is no doubt in my mind in holding that all
the noticees were acting in fraudulent manner and in connivance with each
other in manipulating the price of the scrip in order to induce trading interest in
the said scrip.
Issue IV - Whether the Noticees had violated the provisions of section 12A
(a), (b) and (c) of SEBI Act, 1992 and regulations 3(a), (b), (c), (d), 4(1) and
4(2)(e) of PFUTP Regulations?
28.

In view of the abovementioned analysis and findings, I hold that the

charges leveled against the Noticees are proved and that the allegation of
violation of provisions of section 12A (a), (b) and (c) of SEBI Act, 1992
regulations 3 (a), (b), (c), (d), 4(1) and 4(2)(e) of PFUTP Regulations by the
Noticees stand established.
29.

The aforesaid violations by the noticees make them liable for monetary

penalty under section 15HA of SEBI Act, 1992 which reads as under:
"15HA. Penalty for fraudulent and unfair trade practices.- If any person
indulges in fraudulent and unfair trade practices relating to securities, he shall be
liable to a penalty of twenty-five crore rupees or three times the amount of profits
made out of such practices, whichever is higher."
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30.

While imposing monetary penalty it is important to consider the factors

stipulated in Section 15J of SEBI Act which reads as under:

15J - Factors to be taken into account by the adjudicating officer:
While adjudging quantum of penalty under section 15-I, the adjudicating officer
shall have due regard to the following factors, namely:(a) the amount of disproportionate gain or unfair advantage, wherever
quantifiable, made as a result of the default;
(b) the amount of loss caused to an investor or group of investors as a result of
the default;
(c) the repetitive nature of the default.
31.

I note that on the basis of data available on record, it is difficult, in cases

of such nature, to quantify exactly the disproportionate gains or unfair

advantage enjoyed by an entity and the consequent losses suffered by the
investors. Further the amount of loss to an investor or group of investors also
cannot be quantified on the basis of available facts and data. Even though the
monetary loss to the investors cannot be computed, any manipulation in the
volume or price of the stocks caused by vested interest always erodes investor
confidence in the market so that investors find themselves at the receiving end
of market manipulators. Besides, this kind of fraudulent activity seriously
affects the normal price discovery mechanism of the securities market. I also
find that the Noticees indulged in manipulative and fraudulent trading on
various dates which indicates that the default was of repetitive nature. I am of
the considered belief that persons who indulge in manipulative, fraudulent and
deceptive transactions should be suitably penalized for their acts of omissions
and commissions.
Order
32.

In light of all the above stated facts and circumstances of the case, I

hereby impose the following penalty under section 15HA of the SEBI Act,
1992 on the noticees for violation of provisions of section 12A (a), (b) and (c)
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of SEBI Act, 1992 and provisions of Regulations 3(a), (b), (c), (d), 4(1) and
4(2)(e) of PFUTP Regulations.

33.

Name of the Noticee

Penalty

Moneybee Securities Pvt. Ltd.

` 3,00,000/-

Dhiren Shah (HUF)

` 3,00,000/-

Yogesh Laxman Rege

` 3,00,000/-

I am of the view that the said penalty is commensurate with the

violations committed by the Noticees. Each of the Noticees shall pay the said
amount of penalty by way of demand draft in favour of SEBI - Penalties
Remittable to Government of India, payable at Mumbai, within 45 days of
receipt of this order. The said demand draft should be forwarded to The
Division Chief (IVD-I), Securities and Exchange Board of India, SEBI Bhavan,
Plot No. C4 A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai
400051.
34.

In terms of rule 6 of the Rules, copies of this order are sent to the

Noticees and also to SEBI.

Date: November 28, 2014

A. Sunil Kumar

Place: Mumbai

Adjudicating Officer

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