Securities Appellate TribunalSebi vs Harbinger Trading Company Private ... on 30 September, 2004JUDGMENTA.K. Batra, Member
 

BACKGROUND1. The shares of M/s Surya Roshni Ltd. (hereinafter referred to as 'SRL') were listed for trading at Delhi Stock Exchange (DSE), National Stock Exchange (NSE), The Stock Exchange, Mumbai (BSE), Bangalore Stock Exchange (BgSE), Ahmedabad Stock Exchange (ASE), Madras Stock Exchange (MSE).2. A case was initiated by SEBI on January 11, 2001, based on an investigation report submitted by NSE, wherein the trading pattern of SRL for the time period July 26, 2000 to September 05, 2000 was examined. However, in view of large trading volumes prior to this period, NSE was requested to extend the scope of their investigation and forward a comprehensive report. NSE conducted another investigation for the period May 17, 2000 to September 05, 2000 (earlier period included) and submitted the report to SEBI on August 31, 2001. Since the scrip was also listed and traded on BSE, it was also requested to investigate the matter and submit its report to SEBI. BSE submitted its investigation report to SEBI on June 10, 2002.3. For the same time period i.e. from May 17, 2000 to September 05, 2000, Bangalore, Ahmedabad and Madras Stock Exchange reported nil trading; the trading details received from DSE showed trading to have taken place only on one day i.e. April 18, 2000.4. It was found from the investigations that M/s. Harbinger Trading Co. Pvt. Ltd. (hereinafter referred to as 'Harbinger') had traded in the scrip of SRL, both on the exchange and off the market, thereby being a party to creation of artificial volumes in the scrip. It was also seen that most of the transactions done by them were matched/structured transactions that mirrored the transactions crystallized outside the exchange mechanism.SHOW CAUSE NOTICE AND HEARING5. Pursuant to the investigation, a show cause notice dated 26.05.03 was issued to Harbinger asking them to show cause as to why a suitable direction under Section 11B read withSection 11(4)(b)of SEBI Act, including a direction prohibiting them from dealing in securities for a particular period, should not be issued. It was also mentioned that if they failed to submit any reply within the stipulated period of 15 days then, it would be presumed that they had nothing to say in the matter and SEBI would be free to take such action as deemed fit.6. Harbinger submitted a reply vide their letter dated 30.06.03, wherein they had submitted that they had not dealt in the shares of SRL with a view to create artificial volume or price fluctuations in the market and that the transactions were done only as a temporary means of funding CFL Securities/Tropical Securities and Investment Pvt. Ltd., as they were facing hardships for a long time. They further stated that they had not committed any violations intentionally.7. An opportunity of hearing was given to Harbinger before me, on 21.04.04, on which date Shri Deepak Shah, Director, Harbinger, appeared before me and reiterated their submissions in the reply as specified above. I proceed to analyse the issues based on the facts brought out in the investigation and the submissions made by Harbinger in their reply at the time of hearing before me.ISSUES FOR CONSIDERATION AND FINDINGS8. I observe from the investigations that Harbinger had traded in the shares of SRL through 3 brokers, namely, M/s CFL securities Ltd., M/s Tropical Securities & Investments Ltd. and M/s Lallubhai Ranchhoddas, during the investigation period. I have also noted that the y had accounted for a majority of the trading in SRL during the said period. The transactions carried out by Harbinger in the scrip of SRL with/through the brokers of BSE/NSE are as below:Name of the Broker
  
   
   

Sett. No.
  
   
   

Buy
  
   
   

Sell
  
   
   

Net
  
 
  
   
   

M/s. CFL Securities Ltd.214,57,000
  
   
   

2,39,900
  
   
   

2,17,10C223,74,900
  
   
   

2,39,900
  
   
   

1,35,000232,79,70002,79,700272,55,00002,55,0002810,000010,0003010,000
  
   
   

10,0000312,49,002
  
   
   

2,49,0020322,27,351
  
   
   

40,550
  
   
   

1,86,801331,86,00221,86,0003410,000010,000351,25,1001001,25,0003610,000010,000
  
 
  
   
   

Total
  
   
   

 
  
   
   

21,94,055
  
   
   

7,79,454
  
   
   

14,14,601
  
 
  
   
   

M/s. Tropical Securities82,39,800
  
   
   

2,39,8000and Investment Pvt. Ltd.92,39,800
  
   
   

2,39,8000103,37,400
  
   
   

2,79,700
  
   
   

57,7001190,40010090,3001235,000035,000137,50007,500144504500161,00,00101,00,0011710,000
  
   
   

10,0000181,10,000
  
   
   

10,000
  
   
   

1,00,000192,49,000
  
   
   

1,17,350
  
   
   

1,31,6502090,550090,5502180,000080,0002255,000055,000
  
 
  
   
   

Spot 
  
   
   

31/05/00
  
   
   

 
  
   
   

5,300-5,300
  
 
  
   
   

Spot 
  
   
   

1/6/2000
  
   
   

 
  
   
   

67,000-67,000
  
 
  
   
   

Spot 
  
   
   

6/6/2000
  
   
   

 
  
   
   

50,000-50,000
  
 
  
   
   

Spot 
  
   
   

8/6/2000
  
   
   

 
  
   
   

40,000-40,000
  
 
  
   
   

Spot 
  
   
   

13/06/00
  
   
   

 
  
   
   

35,000-35,000
  
 
  
   
   

Spot 
  
   
   

21/06/00
  
   
   

 
  
   
   

7,500-7,500
  
 
  
   
   

Spot 
  
   
   

28/06/00
  
   
   

 
  
   
   

85,000-85,000
  
 
  
   
   

Spot 
  
   
   

4/7/2000
  
   
   

 
  
   
   

16,000-16,000
  
 
  
   
   

Spot 
  
   
   

12/7/2000
  
   
   

 
  
   
   

1,00,000-1
  ,00,000
  
 
  
   
   

Spot 
  
   
   

12/7/2000
  
   
   

 
  
   
   

84,000-84,000
  
 
  
   
   

Spot 
  
   
   

12/7/2000
  
   
   

 
  
   
   

1,55,000-155,000
  
 
  
   
   

Spot 
  
   
   

19/07/00
  
   
   

 
  
   
   

10,000-10,000
  
 
  
   
   

Spot 
  
   
   

25/07/00
  
   
   

 
  
   
   

1,00,000-100,000
  
 
  
   
   

Spot 
  
   
   

9/8/2000
  
   
   

 
  
   
   

50,000-50,000
  
 
  
   
   

Spot 
  
   
   

17/08/00
  
   
   

 
  
   
   

80,000-80,000
  
 
  
   
   

Spot 
  
   
   

23/08/00
  
   
   

 
  
   
   

35,000-35,000
  
 
  
   
   

Spot 
  
   
   

25/08/00
  
   
   

 
  
   
   

20,000-20,000
  
 
  
   
   

Total
  
   
   

 
  
   
   

16,44,901
  
   
   

18,37,000-1,92,099
  
 
  
   
   

M/s. Lallubhai Ranchodas10025,000-25,0009. The transactions entered into by Harbinger through M/s. CFL Securities Ltd. & M/s. Tropical Securities & Investment Pvt. Ltd. with the following brokers have been matched/structured:Order Date
  
   
   

Order Trade
  
   
   

Qty.Buy Order Time
  
   
   

Order No.
  
   
   

Buying TM
  
   
   

Buy Order Volume
  
   
   

Price
  
   
   

Sell order time
  
   
   

Sell order no.Selling TM
  
   
   

Sell order vol.Sell order price
  
 
  
   
   

29/5/00
  
   
   

340419
  
   
   

50000
  
   
   

13:12:56
  
   
   

200005290513 010
  
   
   

CFL
  
   
   

50000
  
   
   

20.25
  
   
   

13:12:29
  
   
   

200005290512 988
  
   
   

DGP
  
   
   

50000
  
   
   

20.25
  
 
  
   
   

29/5/00
  
   
   

340742
  
   
   

50000
  
   
   

13:13:09
  
   
   

200005290513 534
  
   
   

CFL
  
   
   

50000
  
   
   

20.25
  
   
   

13:13:09
  
   
   

200005290513 542
  
   
   

DGP
  
   
   

50000
  
   
   

20.25
  
 
  
   
   

29/5/00
  
   
   

341306
  
   
   

35000
  
   
   

13:13:22
  
   
   

200005290513 965
  
   
   

CFL
  
   
   

35000
  
   
   

20.25
  
   
   

13:22:22
  
   
   

200005290513 977
  
   
   

DGP
  
   
   

35000
  
   
   

20.25
  
 
  
   
   

5-/7/2000
  
   
   

579729
  
   
   

10000
  
   
   

15:12:47
  
   
   

200007050870 156
  
   
   

CFL
  
   
   

10000
  
   
   

19.8
  
   
   

15:12:46
  
   
   

200007050870 133
  
   
   

DGP
  
   
   

10000
  
   
   

19.8
  
 
  
   
   

12/7/2000
  
   
   

143449
  
   
   

42000
  
   
   

11:05:13
  
   
   

200007120250 951 
  
   
   

CFL
  
   
   

42000
  
   
   

19.8
  
   
   

11:05:12
  
   
   

200007120250 941
  
   
   

DGP
  
   
   

42000
  
   
   

19.8
  
 
  
   
   

12/7/2000
  
   
   

143832
  
   
   

42000
  
   
   

11:05:31
  
   
   

200007120251 615
  
   
   

CFL
  
   
   

42000
  
   
   

19.8
  
   
   

11:05:31
  
   
   

200007120251 612
  
   
   

DGP
  
   
   

42000
  
   
   

19.8
  
 
  
   
   

26/7/00
  
   
   

101330
  
   
   

50000
  
   
   

10:21:55
  
   
   

200007260157 869
  
   
   

CFL
  
   
   

500001811:21:54
  
   
   

200007260157 840
  
   
   

DGP
  
   
   

500001826/7/00
  
   
   

102005
  
   
   

50000
  
   
   

10:22:11
  
   
   

200007120259 012
  
   
   

CFL
  
   
   

50000
  
   
   

18.2
  
   
   

10:22:09
  
   
   

200007120258 858
  
   
   

DGP
  
   
   

50000
  
   
   

18.2
  
 
  
   
   

26/7/00
  
   
   

102582
  
   
   

50000
  
   
   

10:22:24
  
   
   

200007260159 890
  
   
   

CFL
  
   
   

50000
  
   
   

18.3
  
   
   

10:22:24
  
   
   

200007260159 855
  
   
   

DGP
  
   
   

50000
  
   
   

18.3
  
 
  
   
   

26/7/00
  
   
   

103448
  
   
   

36000
  
   
   

10:22:43
  
   
   

200007260161 156 
  
   
   

CFL
  
   
   

50000
  
   
   

18.4
  
   
   

11:22:44
  
   
   

200007260161 210 
  
   
   

DGP
  
   
   

50000
  
   
   

18.4
  
 
  
   
   

26/7/00
  
   
   

104230
  
   
   

10000
  
   
   

10:23:04
  
   
   

200007260162 561
  
   
   

CFL
  
   
   

39000
  
   
   

18.5
  
   
   

11:23:04
  
   
   

200007260162 533
  
   
   

DGP
  
   
   

39000
  
   
   

18.5
  
 
  
   
   

2/8/2000
  
   
   

90150
  
   
   

50000
  
   
   

10:36:50
  
   
   

200008020172 443
  
   
   

CFL
  
   
   

10000
  
   
   

18.4
  
   
   

10:36:49
  
   
   

200008020172 399
  
   
   

DGP
  
   
   

[0000
  
   
   

18.4
  
 
  
   
   

8/8/2000
  
   
   

202846
  
   
   

50000
  
   
   

11:26:08
  
   
   

200008080328 773
  
   
   

CFL
  
   
   

50000
  
   
   

16.8
  
   
   

11:26:07
  
   
   

200008080328 747
  
   
   

DGP
  
   
   

50000
  
   
   

16.8
  
 
  
   
   

8/8/2000
  
   
   

203792
  
   
   

50000
  
   
   

11:26:37
  
   
   

200008080330 097
  
   
   

CFL
  
   
   

50000
  
   
   

16.85
  
   
   

11:26:37
  
   
   

200008080330 092
  
   
   

DGP
  
   
   

50000
  
   
   

16.85
  
 
  
   
   

18/8/00
  
   
   

331042
  
   
   

50000
  
   
   

13:23:42
  
   
   

200008180563 562
  
   
   

CFL
  
   
   

10000
  
   
   

16.8
  
   
   

13:23:42
  
   
   

200008180563 535
  
   
   

DGP100016.8
  
 
  
   
   

23/8/00
  
   
   

677449
  
   
   

39000
  
   
   

15:17:20
  
   
   

200008230978 216
  
   
   

CFL
  
   
   

25000
  
   
   

16.85
  
   
   

15:17:20
  
   
   

200008230978 195
  
   
   

DGP
  
   
   

25000
  
   
   

16.85
  
 
  
   
   

23/8/00
  
   
   

678057
  
   
   

50000
  
   
   

15:17:32
  
   
   

200008230978 939
  
   
   

CFL
  
   
   

25000
  
   
   

16.9
  
   
   

15:17:32
  
   
   

200008230978 961
  
   
   

DGP
  
   
   

25000
  
   
   

16.9
  
 
  
   
   

23/8/00
  
   
   

678654
  
   
   

50000
  
   
   

15:17:44
  
   
   

200008230979 678
  
   
   

CFL
  
   
   

25000
  
   
   

16.8
  
   
   

15:17:44
  
   
   

200008230979 636
  
   
   

DGP
  
   
   

25000
  
   
   

16.8
  
 
  
   
   

23/8/00
  
   
   

679346
  
   
   

10000
  
   
   

15:18:01
  
   
   

200008230980 657
  
   
   

CFL
  
   
   

25000
  
   
   

16.85
  
   
   

15:18:00
  
   
   

200008230980 633
  
   
   

DGP
  
   
   

25000
  
   
   

16.85
  
 
  
   
   

23/8/00
  
   
   

699290
  
   
   

10000
  
   
   

15:25:14
  
   
   

200008231004 932
  
   
   

CFL
  
   
   

25000
  
   
   

16.85
  
   
   

15:25:14
  
   
   

200008231004 919
  
   
   

DGP
  
   
   

25000
  
   
   

16.85
  
 
  
   
   

30/8/00
  
   
   

623836
  
   
   

25000
  
   
   

14:54:22
  
   
   

200008300921 685
  
   
   

CFL
  
   
   

10000
  
   
   

17.85
  
   
   

14:54:22
  
   
   

200008300921 659
  
   
   

DGP
  
   
   

10000
  
   
   

17.85
  
 

  

a. Details of structured transactions of M/s CFL Securities Ltd. with DGP Securities Ltd.(Client: Asha Devi Beriwala and DGP Research A/c.) 
 

As is evident from the above table : i) CFL Securities Ltd. has entered into structured transactions with M/s. DGP Securities Ltd. ii) The buying client for these trades was Harbinger (through CFL Securities). iii) These orders have been placed at almost the same time and for the same quantity and the same rate.b. Details of structured transactions with Rosy Blue Securities Pvt. Ltd. (Client: Tropical Securities & Investment Pvt. Ltd.) 
 
   
   
   

Order Date
  
   
   

Order Trade
  
   
   

Qty.Buy Order Time
  
   
   

Order No.
  
   
   

Buying TM
  
   
   

Buy Order Volume
  
   
   

Price
  
   
   

Sell order time
  
   
   

Sell order no.Selling TM
  
   
   

Sell order vol.Sell order price
  
 
  
   
   

3/7/2000
  
   
   

471829500014:58:12
  
   
   

200007030722 808
  
   
   

CFL500020.35
  
   
   

14:58:12
  
   
   

200007030722 830
  
   
   

Rosy500020.35
  
 
  
   
   

3/7/2000
  
   
   

472297
  
   
   

10000
  
   
   

14:58:27
  
   
   

200007030723 391
  
   
   

CFL
  
   
   

10000
  
   
   

20.35
  
   
   

14:58:27
  
   
   

200007030723 399
  
   
   

Rosy
  
   
   

10000
  
   
   

20.35
  
 
  
   
   

3/7/2000
  
   
   

472789
  
   
   

10000
  
   
   

14:58:42
  
   
   

200007030723 969
  
   
   

CFL
  
   
   

10000
  
   
   

20.25
  
   
   

14:58:43
  
   
   

200007030723 993
  
   
   

Rosy
  
   
   

10000
  
   
   

20.25
  
 
  
   
   

3/7/2000
  
   
   

473369
  
   
   

10000
  
   
   

14:59:03
  
   
   

200007030724 775
  
   
   

CFL
  
   
   

10000
  
   
   

20.2
  
   
   

14:59:03
  
   
   

200007030725 763
  
   
   

Rosy
  
   
   

10000
  
   
   

20.2
  
 
  
   
   

3/7/2000
  
   
   

474076
  
   
   

10000
  
   
   

14:59:33
  
   
   

200007030725 821
  
   
   

CFL
  
   
   

10000
  
   
   

20.25
  
   
   

14:59:36
  
   
   

200007030725 889
  
   
   

Rosy
  
   
   

10000
  
   
   

20.25
  
 
  
   
   

3/7/2000
  
   
   

424876500015:00:12
  
   
   

200007030727 091
  
   
   

CFL500020.3
  
   
   

15:00:13
  
   
   

200007030727 110
  
   
   

Rosy500020.3
  
 
  
   
   

4/7/2000
  
   
   

351664
  
   
   

50000
  
   
   

13:39:39
  
   
   

200007040557 111
  
   
   

CFL500019.4
  
   
   

13:39:40
  
   
   

200007040557 115
  
   
   

Rosy
  
   
   

50000
  
   
   

19.4
  
 
  
   
   

4/7/2000
  
   
   

352027
  
   
   

15000
  
   
   

13:39:58
  
   
   

200007040557 595
  
   
   

CFL
  
   
   

15000
  
   
   

19.45
  
   
   

13:39:57
  
   
   

200007040557 575
  
   
   

Rosy
  
   
   

15000
  
   
   

19.45
  
 
  
   
   

4/7/2000
  
   
   

352306
  
   
   

10000
  
   
   

13:40:12
  
   
   

200007040557 947
  
   
   

CFL
  
   
   

10000
  
   
   

19.4
  
   
   

13:40:13
  
   
   

200007040557 959
  
   
   

Rosy
  
   
   

10000
  
   
   

19.4
  
 
  
   
   

4/7/2000
  
   
   

352659
  
   
   

11000
  
   
   

13:40:31
  
   
   

200007040558 464
  
   
   

CFL
  
   
   

11000
  
   
   

19.45
  
   
   

13:40:31
  
   
   

200007040558 473
  
   
   

Rosy
  
   
   

11000
  
   
   

19.45
  
 
  
   
   

4/7/2000
  
   
   

352990900013:40:50
  
   
   

200007040558 961
  
   
   

CFL900019.4
  
   
   

13:40:51
  
   
   

200007040558 980
  
   
   

Rosy900019.4
  
 
  
   
   

4/7/2000
  
   
   

353257
  
   
   

15000
  
   
   

13:41:07
  
   
   

200007040559 81
  
   
   

CFL
  
   
   

15000
  
   
   

19.45
  
   
   

13:41:07
  
   
   

200007040559 393
  
   
   

Rosy
  
   
   

15000
  
   
   

19.45
  
 
  
   
   

4/7/2000
  
   
   

353448
  
   
   

15000
  
   
   

13:41:20
  
   
   

200007040559 700
  
   
   

CFL
  
   
   

15000
  
   
   

19.4
  
   
   

13:41:20
  
   
   

200007040559 797
  
   
   

Rosy
  
   
   

15000
  
   
   

19.4
  
 
  
   
   

4/7/2000
  
   
   

353805
  
   
   

20000
  
   
   

13:41:39
  
   
   

200007040560 179
  
   
   

CFL
  
   
   

20000
  
   
   

19.45
  
   
   

13:41:39
  
   
   

200007040560 191
  
   
   

Rosy
  
   
   

20000
  
   
   

19.45
  
 
  
   
   

4/7/2000
  
   
   

401221
  
   
   

25000
  
   
   

14:18:29
  
   
   

200007040624 433
  
   
   

CFL
  
   
   

250002014:18:29
  
   
   

200007040624 458
  
   
   

Rosy
  
   
   

25000204/7/2000
  
   
   

401548
  
   
   

25000
  
   
   

14:18:46
  
   
   

200007040624 995
  
   
   

CFL
  
   
   

25000
  
   
   

19.8
  
   
   

14:18:45
  
   
   

200007040624 980
  
   
   

Rosy
  
   
   

25000
  
   
   

19.8
  
 
  
   
   

4/7/2000
  
   
   

402135
  
   
   

25000
  
   
   

14:19:12
  
   
   

200007040625 802
  
   
   

CFL
  
   
   

25000
  
   
   

19.75
  
   
   

14:19:13
  
   
   

200007040625 808
  
   
   

Rosy
  
   
   

25000
  
   
   

19.75
  
 
  
   
   

4/7/2000
  
   
   

402559
  
   
   

30000
  
   
   

14:19:34
  
   
   

200007040626 448
  
   
   

CFL
  
   
   

30000
  
   
   

20.05
  
   
   

14:19:33
  
   
   

200007040626 410
  
   
   

Rosy
  
   
   

30000
  
   
   

20.05
  
 

 

i. CFL Securities has entered into 18 structured transactions amounting to a total of 2,55,000 shares with Rosy Blue Securities Ltd.ii. All these orders were executed by CFL on behalf of Harbinger. The other side of the transactions was executed by Rosy Blue Securities Pvt. Ltd. for Tropical Securities & Investments Ltd.iii. The orders for all the above deals have been placed at the same time at the same price for the same quantity.c. Details of structured transactions with Ventura Securities Ltd.(Client: Globex Financial Services Ltd.) 

 
   
   
   

Order Date
  
   
   

Order Trade
  
   
   

Qty.Buy Order Time
  
   
   

Order No.
  
   
   

Buying TM
  
   
   

Buy Order Volume
  
   
   

Price
  
   
   

Sell order time
  
   
   

Sell order no.Selling TM
  
   
   

Sell order vol.Sell order price
  
 
  
   
   

17/5/00
  
   
   

254387
  
   
   

100000
  
   
   

13:26:30
  
   
   

200005170465730
  
   
   

CFL
  
   
   

100000
  
   
   

19.9
  
   
   

13:26:29
  
   
   

200005170465719
  
   
   

Ventura
  
   
   

100000
  
   
   

19.9
  
 
  
   
   

17/5/00
  
   
   

284728
  
   
   

100000
  
   
   

13:26:47
  
   
   

200005170466092
  
   
   

CFL
  
   
   

100000
  
   
   

19.85
  
   
   

13:26:47
  
   
   

200005170466082
  
   
   

Ventura
  
   
   

100000
  
   
   

19.85
  
 
  
   
   

17/5/00
  
   
   

284915
  
   
   

17000
  
   
   

13:27:07
  
   
   

200005170466503
  
   
   

CFL
  
   
   

17000
  
   
   

19.8
  
   
   

13:27:07
  
   
   

200005170466492
  
   
   

Ventura
  
   
   

17000
  
   
   

19.8i) A total of 3 structured deals have been executed between CFL Securities and Ventura Securities Ltd. amounting to a total of 2,17,000 shares.ii) The client for these trades was also Harbinger on one side.iii) These orders have been placed at almost same time and for the same quantity and the same rate.Details of structured transactions with PNR Securities Ltd. (Client: Tropical Securities & Investment P. Ltd.) 

 
   
   
   

Order Date
  
   
   

Order Trade
  
   
   

Qty.Buy Order Time
  
   
   

Order No.
  
   
   

Buying TM
  
   
   

Buy Order Volume
  
   
   

Price
  
   
   

Sell order time
  
   
   

Sell order no.Selling TM
  
   
   

Sell order vol.Sell order price
  
 
  
   
   

13/7/00
  
   
   

42391
  
   
   

55000
  
   
   

10:06:33
  
   
   

200007130071981
  
   
   

CFL
  
   
   

550002010:06:33
  
   
   

200007130072015
  
   
   

PNR
  
   
   

550002013/7/00
  
   
   

43335
  
   
   

100000
  
   
   

10:06:50
  
   
   

200007130073687
  
   
   

CFL
  
   
   

1000002010:06:50
  
   
   

200007130073694
  
   
   

PNR
  
   
   

10000020i) CFL Securities Ltd. has entered into 2 structured transactions with M/s. PNR Securities Ltd.ii) The buying client for these trades was Harbinger Trading through CFL Securities and Tropical Securities & Investment Ltd. was the selling client. Both the clients are related to each other.iii) These orders have been placed at almost same time and for the same quantity and the same rate.10. As observed from the submissions made by Harbinger, I understand that the transactions , as detailed above, were a part of an effort to raise temporary funds for meeting the pay-in obligations of M/s CFL Securities Ltd. and M/s Tropical Securities and Investments Pvt. Ltd., who were facing a funds crunch at that time. The methodology by which these transactions had been carried out and the manner in which funds had been routed is as follows:i. Tropical had a block of (approx. 2,35,000) shares of SRL and instead of selling them in the open market, they had arranged funding through M/s. Aditi Dalal/Harbinger Trading, who in turn arranged spot funding from different entities and these clients who had provided funding on the basis of SRL shares, sold these shares through different brokers of BSE/NSE to Tropical itself, by way of matched transactions as shown in the tables above.ii. In each of the above transactions, the selling client on the exchange had funded the off market transaction of Harbinger. The selling client would buy shares of SRL from Harbinger in off market deals and immediately on receipt of the shares in their account, enter into a reverse transaction on the stock exchange, thereby creating an obligation on Tropical to return the monies lent by them to Harbinger.11. In view of the above, Harbinger has been responsible for creating false and misleading appearance of trading in the market, in the shares of SRL, by rotating the same set of shares through the stock exchange and also for misutilising the stock exchange mechanism, by transferring/mirroring their off the market financing transactions on to the exchange, in an inappropriate manner, by utilizing the comfort cum security of the Settlement Guarantee Fund of the exchange, which is intended for genuine trade transactions. In doing so, they have also created artificial volumes in the market. The submission that this was done for the purpose of raising temporary finance to meet the pay-in obligations of Tropical/CFL is of no consequence in the present case, as the stock exchange is meant for genuine transactions and is not a forum for such funding activities. The said transactions have created a false/misleading appearance of trading in the scrip of SRL, which is not in accordance with the normal cycle and nature of transactions carried out at the stock exchange.12. From the above, I conclude that harbinger has been responsible for creation of artificial volume and misleading appearance of trading in the market; put to risk the exchange mechanism by transferring/mirroring the transactions carried out through off-market deals , on to the stock exchange. Therefore, I hold them guilty of having violated the provisions ofRegulation 4 (b)and (c) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 which read as under :"4. No person shall -(a) ............(b) indulge in any act, which is calculated to create a false ormisleading appearance of trading on the securities market;(c) indulge in any act, which results in reflection of prices of securities based on transactions that are not genuine trade transactions;(d) ............ (e)............13. I note thatRegulation 13of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 reads as under :-"Repeal and savings13. (1) The Securities and Exchange Board of India ((Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 is hereby repealed.(2) Notwithstanding repeal of the Securities and Exchange Board of India ((Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995, any violation of regulations 3, 4, 5 and 6 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 shall be investigated and proceeded against in accordance with the procedure laid down in these regulations.(3) Notwithstanding repeal of the Securities and ExchangeBoard of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995, any investigation pending, at the commencement of these regulations 	shall 	be 	continued 	and 	disposed 	of 	in accordance 	with 	the 	procedure 	laid 	down 	in 	these regulations."14. I find that Harbinger was responsible for creating false and misleading appearance of trading and manipulation in the scrip of SRL. Innocent investors would be induced to trade by such false appearance of trading in the securities market, unless these unscrupulous activities are prevented/contained. In view of my findings mentioned hereinabove, I find that it is a fit case for issue of directions against Harbinger, whose conduct is found to be detrimental to the interest of investors and the securities market.ORDER15. Therefore, in exercise of the powers conferred upon me by virtue ofSection 19read withSections 11and11Bof the Securities and Exchange Board of India Act, 1992 read withRegulation 4 (b)and (c) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 andRegulation 13of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, I hereby direct that M/s. Harbinger Trading Company Pvt. Ltd. be restrained from accessing the securities market and prohibited from buying, selling or dealing in securities, directly or indirectly, for a period of six months.16. This direction shall come into force with immediate effect.