Sebi slaps Rs 20 lakh fine on 2 brokers in Adani Export case

Market watchdog Sebi has slapped a total penalty of Rs 2000000 on two entities for fraudulent trading in shares of erstwhile Adani Exports and violating stock brokers' norms.In its order dated April 30, Sebi ( Securities and Exchange Board of India ) has imposed a penalty of Rs 900000 each on Rajendra Jayantilal Shah and Rajesh N Jhaveri for fraudulent trade practices, and another Rs 100000 each for violating code of conduct for stock brokers.The matter relates to Sebi probe in the shares of Adani Exports (now known as Adani Enterprises ) between July, 2004 and January, 2005 and August-September,2005.During these periods, shares had witnessed huge spurt in volumes as well as wide fluctuations in price.Sebi found that certain entities through collusion with the brokers and other clients, transacted in the shares of the company in a manner that led to creation of artificial volumes in the scrip.Jhaveri and Shah, sub-brokers, had allegedly executed synchronised trades in the shares of Adani Exports.The transactions were designed to create a false market and distorted market equilibrium leading to spurt in the price of the scrip which did not have any correlation with the performance of the company, Sebi said."The noticee (Jhaveri and Shah) has miserably failed in executing its duties and was unable to keep a check on its client," Sebi said."Even if the noticee had not received any disproportionate gain or unfair advantage due to the said manipulation, the same has surely harmed the integrity of a fair and open market and has caused loss to the innocent investors," Sebi said in two similar-worded orders.Consequently, the regulator has imposed a "penalty of Rs 900000 on the noticee (Shah and Jhaveri) for the violation... of PFUPTP (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations and Rs 100000 ...for the violation of... Broker Regulations ."