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In The Matter Of Adjudication Proceedings Against Shri Ashvin C Dalal

Mar 30, 2007
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Orders : Orders of AO

ADJUDICATION ORDER NO. - BS/AO-09 /2007

ORDER UNDER SECTION 15I OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5(1) OF THE SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 IN THE MATTER OF ADJUDICATION PROCEEDINGS AGAINST SHRI ASHVIN C DALAL.

  1. Pursuant to the investigation conducted by the Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) into the dealings in the scrip of Robinson Worldwide Trade Limited (hereinafter referred to as ‘RWTL’) , I was appointed as the Adjudicating Officer to inquire into and adjudge under Section 15I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the ‘SEBI Act’), the violation alleged to have been committed by Shri Ashvin C Dalal (hereinafter referred to as the ‘noticee’) on account of his failure to furnish to SEBI, information regarding his dealings in the scrip of RWTL.
     
  2. It is alleged that the investigating authority of SEBI issued summons / letters dated December 24, 2004, February 25, 2005, November 10, 2005 and January 18, 2006 to the noticee requiring the noticee to furnish the details regarding his dealings in the shares of RWTL. It is alleged that the noticee failed to comply with the said summons and failed to submit the information to the investigating authority.

    NOTICE AND REPLY
  3. A show cause notice in terms of the provisions of Rule 4(1) of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 was issued to the noticee on September 19, 2006 seeking reply of the noticee as to why an inquiry should not be held against him in respect of the violations alleged to have been committed by him.

     
  4. It is noted that the noticee by his letter dated October 3, 2006 replied to the show cause notice. However, considering the facts of the case, it was decided to conduct an inquiry in the matter and the noticee was advised to attend the inquiry on November 24, 2006.
     
  5. The noticee attended the hearing on November 24, 2006 and submitted  that it was a lapse on his part in not appearing before the investigating authority. The Noticee further admitted that though he had certain details with him, he was waiting for the brokers details which further delayed in submitting his reply.

    CONSIDERATION OF EVIDENCE AND FINDINGS
  6. The allegation against the noticee is that he failed to comply with the summons / letters dated December 24, 2004, February 25, 2005, November 10, 2005 and January 18, 2006 issued by investigating authority and in view of the same, he is liable to the penalty prescribed under Section 15 A (a) of the SEBI Act, 1992. In this regard it is pertinent to note that Section 11 C (3) of the SEBI Act empowers the investigating authority of SEBI to require any person associated with the securities market to furnish such information or to produce such records as may be required by the investigating authority. Further, Section 11 C (5) empowers the investigating authority to examine such persons. Timely submission of information is very important for concluding investigation proceedings and non co-operation by an entity can be detrimental to the interests of investors and securities market on account of any delay in the investigation.

  7. In this regard, the provisions of Section 15A(a) of SEBI Act provides the following:

    “Penalty for failure to furnish information, return, etc.: If any person, who is required under this Act or any rules or regulations made thereunder, to furnish any document, return or report to the Board, fails to furnish the same, he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.”

  8. It is noted that investigating authority issued letter dated December 24, 2004 to the noticee seeking the following information:
    1. Name of the brokers through whom you traded and why did you buy and sell simultaneously through different brokers.
    2. The client codes used by different brokers while trading for you.
    3. The reasons for buying the shares of a company which has continuously shown a dismal performance over a period of time, at a high price which ranged from Rs.92 to Rs.100.
    4. The overall gains or loss incurred in these transactions.
    5. Whether you are still holding the shares of this company? If yes, details thereof.
    6. Details of entering into any off market transactions in the scrip. When, with whom and for how many shares?
    7. The demat account statement for the period from 1st January 2004 to 30th September, 2004.

       
  9. The noticee was required to furnish the said details by 31st December, 2004. It is noted that vide his letter dated 30th December, 2004 the noticee requested 14 days time (i.e. till 14th January, 2005) to submit the required details.

     
  10. It is noted that no reply was received from the noticee subsequently. The Investigating Authority issued another letter dated February 25th, 2005 to the noticee informing that the information sought vide its earlier letter dated December 24th, 2004 is still not furnished. The noticee was advised to submit the required details latest by March 4, 2005. The noticee was also advised to send copy of bank account statements highlighting the payment / receipt of money for market / off market transactions in the scrip of RWTL during the period March 30, 2004 to July 30, 2004. The noticee was further advised to give the break up in case of consolidated payment.

  11. It is noted from the facts of the case that noticee received the notice sent by the investigating authority but again failed to submit the information sought by the investigating authority. It is noted that investigating authority issued another summons to the noticee on November 10, 2005, which required the noticee to submit the above mentioned details by November 17, 2005. The noticee was also informed that his personal appearance was not required at that stage of inquiry and providing information would be considered as compliance of summons. It is noted from the facts available on record that the said notice summons was received by the noticee.

     
  12. It is further noted from the facts available on record that the noticee replied to the Investigating Authority by an undated letter received by SEBI on 14th November, 2005 seeking extension of time. However, the noticee again failed to submit the required details without giving any reasonable explanation.

     
  13. Subsequently the investigating authority issued another summons dated January 18, 2006 seeking the said information from the noticee. It is noted from the facts available on record that the said summons was also duly received and acknowledged. However no reply was received from the noticee in the matter.

     
  14. In view of the above details, it is concluded that the noticee failed to comply with the summons / letters dated December 24, 2004, February 25, 2005, November 10, 2005 and January 18, 2006. It is noted from the details stated in the preceding paragraphs that the Investigating authority was only seeking preliminary / basic details from the noticee like name of his brokers, client codes used by him, demat account statement, details of off market trades etc. 

     
  15. It is pertinent to note that the noticee failed to submit the details to the investigating authority. The said actions of the noticee become more serious in view of the fact that the noticee purchased 20800 shares and sold 47700 shares during the period March 2004 and July 2004. Thus, it can be seen that he had executed substantial trades in this scrip. It is further stated that the noticee bought such a large number of shares of a company which has continuously shown a dismal performance over a period of time. 

     
  16. It is further noted from the findings of the investigation that the major selling clients had purchased the shares from one DPS Shares & Securities Pvt. Ltd. in the year 2003 in physical form through off-market deals at a very nominal price. During the investigation period, the same were sold at very high prices to the noticee and other clients who traded through DPS and were related to the firm. In view of the above circumstances, the investigating authority of SEBI sought certain detains of the trades by the noticee and the noticee failed to provide these details. The reasons cited by the notice in respect of his failure to provide information was that some of the details were not available with him. As the noticee was seeking extension of time without even providing the details which was available with him, it is seen that the failure to furnish information has to be viewed seriously. In view of the same, the failure on the part of the noticee to comply with the summons/notices attract penalty under Section 15A (a) of the SEBI Act.

     
  17. In this regard, the provisions of Section 15J of the SEBI Act and Rule 5 of the Rules require that while adjudging the quantum of penalty, the adjudicating officer shall have due regard to the following factors namely;
    1. the amount of disproportionate gain or unfair advantage wherever quantifiable, made as a result of the default
    2. the amount of loss caused to an investor or group of investors as a result of the default
    3.  the repetitive nature of the default

       
  18. It is noted from the details available on record that the noticee had executed substantial trades in the scrip. Further, he is stated to have bought a large number of shares of a company which has continuously shown a dismal performance over a period of time. Though, it is not possible to quantify the gains made by the noticee or the loss caused to investors on account of the violation committed by the noticee. As it is seen from the facts available on records, the noticee failed to comply with the summons / letters dated December 24, 2004, February 25, 2005, November 10, 2005 and January 18, 2006, and hence the failure on the part of the noticee is repetitive in nature.

    ORDER
  19. Considering the facts and circumstances of the case it is established that Shri Ashvin C Dalal failed to provide necessary information to the Investigating Authority of SEBI in response to the summons issued by it. Though the noticee has forwarded some details during the course of the adjudication proceedings, the fact remains that the noticee failed to provide information to the investigating authority. However considering the said submisson, a lenient view is taken with regard to the penalty attracted in respect of the violation committed by the noticee. Considering the facts and circumstances of the case and the violation committed by the noticee, I impose a penalty of Rs Fifty Thousand  (Rs. 50,000) on Shri Ashvin C Dalal in terms of the provisions of Section 15 A (a) of the SEBI Act, 1992 for failure to provide necessary information to SEBI. In the facts and circumstances of the case, I am of the view that the said penalty is commensurate with the violation committed by Shri Ashvin C Dalal .

     
  20. The penalty shall be paid by way of demand draft drawn 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 shall be forwarded to Chief General Manager, Investigation Department (ID1), Securities and Exchange Board of India, Plot No. C4-A, ‘G’ Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051.

     
  21. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995, copies of this order are sent to Shri Ashvin C Dalal  and also to Securities and Exchange Board of India.

 

PLACE: Mumbai                                                                              Biju. S

DATE: March 30, 2007                                                                     Adjudicating Officer