Order against Shyambhai N. Patel In The Scrip Of Sword & Shield Pharma Limited

WTM/TCN/ 24 / IVD/ 06 /07

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM : Dr. T.C. NAIR, WHOLE TIME MEMBER

ORDER

Under regulation 13(4) of Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 against Shyambhai N. Patel, sub broker SKSE Securities Ltd. for the dealings in the scrip of Sword and Shield Pharma Ltd.

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) had conducted investigation into the affairs relating to the trading of the scrip of Sword and Shield Pharma Ltd. (hereinafter referred to as “SSPL”) subsequent to the unusual increase in the price and volume of the scrip during the period - 3^rd May, 2001 to 6^th July, 2001. It was noticed in the investigation that a group of entities were acting in concert for executing circular and structured trades to affect the price of the scrip.

2. Shri Shyambhai N. Patel, (Shyambhai) a member of Saurashtra Kutch Stock Exchange Ltd., Rajkot and also a sub broker of SKSE Securities Ltd., was alleged to have executed transactions for Radhe Investments and Paragon Investment Pvt. Ltd. (Paragon) who were stated to be involved in the manipulation of the scrip. Shyambhai was alleged to have aided and abetted the clients in the manipulation of the scrip and also failed to exercise due diligence while dealing with the clients.

3. In view of the findings of the investigation, an Enquiry Officer was appointed vide Order dated October 14, 2004 to enquire into the alleged violations committed by Shyambhai. On completion of enquiry, the Enquiry Officer submitted his report dated June 28, 2005 recommending no penalty on Shyambhai.

4. In the said report, the Enquiry Officer found that though Shyambhai had executed the trades for Radhe Investments and Paragon, no evidence is available on record indicating the connection between Shyambhai and the clients except broker and client relationship. Further in absence of clear evidence, it cannot be concluded that Shyambhai was aware that the clients were doing fictitious trading.  Based on the evidence available on record, the Enquiry Officer concluded there is no evidence that Shyambhai played manipulative role along with the clients and aided and abetted the clients to execute structured deals or reversed trades and thereby violated the provisions of Regulation 4 (b), (c) and (d) of FUTP Regulations and clauses A (2), A(3) and A(4) of the Code of Conduct for sub brokers as specified in Schedule II under Regulation 15 of the Stock Brokers Regulations.

5. After taking into consideration the facts and circumstances of the case and the findings of the Enquiry Officer mentioned in the report and the relevant provisions of law governing the case, I have come to the conclusion that this matter is not a fit case to levy any penalty, as the charges against Shyambhai have not been established with reasonably good evidence. Further, from the legal point of view, I feel that there is no evidence on record to prove that Shyambhai failed to exercise due care, skill and diligence in the conduct of its business or has indulged into manipulative role with its clients.

6. Having regard to what has been stated above, I find no reason to differ with the recommendations of the Enquiry Officer. Accordingly, in exercise of the powers conferred upon me in terms of Section 19 of the Securities and Exchange Board of India Act, 1992 read with Regulation 13(4) of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, I hereby dispose of the enquiry proceedings as above against Shri Shyambhai N. Patel.