WTM/RKA/EFD/DRA II/ 53 /2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER
Under section 11B read with section 11(4) of the Securities and Exchange Board of India
Act, 1992 in respect of:
Sl. No.
1.
2.
3.
4.
5.
6.
7.
8.

Name of the Entity

Mr. Bhavesh Pabari
Mr. Bipin Jayant Thaker
Mr. Kishore Chauhan
Mr. Prem Mohanlal Parikh
Mr. Hemant Madhusudan Seth
Ms. Mala Hemant Seth
Mr. Ankit Sanchaniya
Mr. Bharat Shantilal Thakkar

PAN
AKGPP8679N
ABYPT4984H
AFPPC9703G
ALHPP3489N
ANOPS8607E
AZXPS0694J
BLNPS3316L
AAZPT9542R

In the matter of dealings in the shares of LGS Global Limited

Appearances:
Mr. Bhavesh Pabari in Person.
_________________________________________________________________________
1. LGS Global Limited (hereinafter referred to as "LGS") is a company listed on Bombay
Stock Exchange Limited ("BSE"). Securities and Exchange Board of India ("SEBI"')
initiated investigation into the trading in certain scrips including LGS pursuant to
detection of a huge rise in the traded volumes and/or price of the shares of these
companies during the years 2008, 2009 and 2010.
2. Upon analysis of the trading activity in the scrips, it was prima facie observed that certain
entities had indulged in creating artificial volume by trading in a synchronized manner
carrying out off-market transfers among themselves for the purpose of meeting settlement
obligations of another and thus contributing to the price rise in these scrips.
3. In view of the above, in order to protect the interests of investors and to preserve the
safety and integrity of the market, SEBI passed an interim order dated February 02, 2011
(interim order) restraining 39 persons/entities including Mr. Bhavesh Pabari, Mr. Bipin
Jayant Thaker, Mr. Kishore Chauhan, Mr. Prem Mohanlal Parikh, Mr. Hemant
Madhusudan Seth, Ms. Mala Hemant Seth, Mr. Ankit Sanchaniya and Mr. Bharat Shantilal
Thakkar from accessing the securities market, and further prohibited them from buying,
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Order in the matter of LGS Global Limited
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selling or dealing in securities in any manner whatsoever, till further directions. The said
interim order was later confirmed by SEBI vide order dated July 08, 2011(confirmatory order).
4. SEBI initiated an investigation relating to buying, selling or dealing in the shares of the
scrip of LGS to inter alia ascertain the violation of the provisions of the Securities and
Exchange Board of India Act, 1992 ("SEBI Act") and the Rules and Regulations made
thereunder. The period of investigation was taken as February 10, 2009 to May 07, 2010
(hereinafter referred to as "investigation period"). Investigation inter alia revealed that
i.

Certain connected/related entities had traded significantly in the scrip of LGS

during 2008, 2009 and 2010. The relationship/connection between the entities was
determined based on at least one of the following parameters:
(a) Similarities in the particulars/details in the KYC documents such as common
telephone number, addresses, e-mail addresses, etc.
(b) Trading activity in terms of buy/sell among the group and the frequency and
off-market transfers between them
(c) Fund transfers between the members of the group.

ii.

On the basis of the said criteria, one group was identified as the "Pabari-Parikh"
group ("PP group"). The members of the PP group and the basis of
relationship/connection amongst them are as follows:
Table 1: Relationship among the PP group entities
Sl.
No.

Client Name

KYC Relation

Share movement
through
off
market
transaction
Introduced entities at sl. With entity nos. 11, 10, 9, 7 for trading at sl. No. 16.
a/c and knows sl. No. 14.

1.

Bhupesh
Rathod

2.

Ketan
Shah

3.

Bharat Shantilal Entity at sl. no. 9 is his

Thakkar
nephew.
Same address with sl. no.9.
Entity at sl. no. 9 is his
nominee.
Joint a/c with entity at sl.
no. 9.
Business relations with
entities at sl. nos. 4, 6, 7,
10, 11, 16, 17.
Bipin
Jayant Same Tel. no. with entity at

4.

Babulal -

Fund
Movement

With entity at sl.

no.10.

With entities With entity at sl.

at sl. nos. 9, no. 9.
10, 16.

With entity With entities at sl.

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Order in the matter of LGS Global Limited
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Thaker

sl. no. 9.
at sl. no. 9.
nos. 12, 6, 9, 10,
Business relations with
11.
entities at sl. nos. 3, 6, 7, 9,
10, 11, 16, 17.
G Same address & Tel. no. as With entity entity at sl. no. 8 who has at sl. no. 6.
share movement with
entity at Sl. no. 9.
Entity at sl. No. 6 is
nephew of entity at sl. no.
9 and shares same Tel. no.
with entity at sl. no. 9.

5.

Bharat
Vaghela

6.

Chirag Rajnikant Same Tel. no. with entity at

Jariwala
sl.no.9.
Entity at sl. no. 9 is his
uncle.
Business relations with
entities at sl. nos. 3, 4, 7, 9,
11, 16, 17.
Kishore
Joint a/c with entity at sl.
Chauhan
no. 9.
Entities at Sl. nos. 9 & 11
are witness for demat a/c.
Business relations with
entities at sl. nos. 3, 4, 6, 9,
10, 11, 16.
Bipinkumar
Gandhi

With entities With entity at sl.

at sl. nos. 9, no. 4.
11, 5.

With entity at sl.

no. 9.

Bhavesh Pabari

With entities at sl.

nos. 10, 11, 3, 4,
16, 17, 8.

7.

8.
9.

Entity at sl. no. 3 is his

uncle & entity at sl. no. 17
is his brother in law.
Entity at sl. no. 10 is
cousin of entity at sl. no. 9.
Entities at sl. nos. 9 & 11
both directors of Rajnandi
Yarns Pvt. Ltd.
Share common Tel. no.
with entities at sl. nos. 16,
17, 4.
Entity at sl. no. 1
introduced him for trading
a/c.
Business relations with
entities at sl. nos. 4, 6, 7,
10, 11, 14, 16.
10. Prem Mohanlal Entity at sl. no. 10 is
Parikh
cousin of entity at sl. no.9.
Common
email
with
entities at sl. 16, 10 & 17.

With entities With entities at sl.

at sl. nos. 9, nos. 9, 10, 11, 17.
10, 11.

With entities With entities at sl.

at sl. nos. 9, nos. 9, 11, 7, 3, 4,
11, 7.
12, 16, 17.

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Order in the matter of LGS Global Limited
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Entity at sl. no. 11 is

nominee of entity at sl.
no.10.
Business relations with
entities at sl. nos. 3, 4, 6, 7,
9, 11, 16, 17.
11. Hemant
Entities at Sl. nos. 9 & 11
Madhusudan
both directors of Rajnandi
Sheth
Yarns Pvt. Ltd.
Same email with entity at
sl. no. 17.
Business relations with
entities at 1, 3, 10, 16, 17,
4, 6, 7 & sl. no. 14 is his
wife & sl. no. 15 is his
nephew.
12. Jigar
Praful Ghoghari
13. Vipul
Shah

14. Mala
Sheth

With entities With entities at sl.

at sl. nos. 9, nos. 9, 10, 7, 14,
10, 7.
16, 17, 12, 4.

With
Kaushik
Rajnikant
Mehta who
has
offmarket
transaction
with entity
at sl. No. 9.
Hemant Entity at sl. no. 14 is the With entities
wife of entity at sl. no. 11 at sl. nos. 9,
and entity at sl. no. 15 is 10.
the nephew.

15. Gaurang
Seth

Hiralal -

Ajit Has common address &

Tel. no. with entity at sl.
no. 11 & entities at sl. no.
11 and 9 both directors of
Rajnandi Yarns Pvt. Ltd.
16. Ankit
Same Tel. no. with entity at
Sanchaniya
sl. no. 10 and also shares
Tel. no. with entity at sl.
no. 9 who is the nominee
for his a/c.
Business relations with
entities at sl. nos.3, 4, 6, 7,
9, 10, 11, 17.
17. Vivek Kishanpal Entity at sl. no. 9 is the
Samant
brother in law & shares
common Tel. no. & entity
at sl.no. 9 is the nominee
of sl. no. 17 for trading a/c

With entities at sl.

nos. 4, 10, 11, 16.
With entity at sl.
no.9.

With entity at sl.

no. 11,

With entities With entities at sl.

at sl. nos. 9, nos. 9, 10, 11, 6,
10.
12, 17.

With entity With entities at sl.

at sl. no. 11. nos. 9, 11, 6, 7, 10,
16.

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Order in the matter of LGS Global Limited
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& bank a/c.

Shares email with entity at
sl. no. 11.
Shares email with entity at
sl. no. 10.
iii.

iv.

v.

vi.

vii.

On BSE, the PP group entities including the above mentioned 8 entities i.e. Mr.
Bhavesh Pabari, Mr. Bipin Jayant Thaker, Mr. Kishore Chauhan, Mr. Prem Mohanlal
Parikh, Mr. Hemant Madhusudan Seth, Ms. Mala Hemant Seth, Mr. Ankit Sanchaniya
and Mr. Bharat Shantilal Thakkar traded in 71,94,984 shares constituting 35.37% of the
total market volume in the scrip traded during the period under investigation.
Several of the trades were synchronised amongst above mentioned 8 entities in the
scrip of LGS during the investigation period. It was also observed that out of the total
trading of 71,94,984 shares within these entities, the buy and sell orders with respect to
33,92,951 shares accounting for 16.68% of the market volume were placed within a
span of one minute. These 33,92,951 shares constituted 33.13% of the total purchases
and 38.45% of the total sales of the above mentioned 8 entities. Out of these 33,92,951
shares, the buy and sell orders with respect to 5,98,895 shares accounting for 2.94% of
the total market volume, were placed in such a manner that the difference between
placement of orders by buyer and seller was within one minute with the order rate as
well as order quantity of buy side and sell side was the same. These 5,98,895 shares
constitute 5.85% of the total purchases and 6.79% of the total sales of the above
mentioned 8 entities.
It was further observed that the PP group entities also indulged in self trades on the
BSE (i.e. buy client as well as the 8sell client for a given trade was the same resulting in
no change of beneficial ownership). In all these self trades mentioned above, the buy
and sell stock brokers were also same.
The price volume data analysis revealed that the shares of LGS were traded for 301
trading days during the investigation period on BSE. Out of 301 trading days, the PP
group entities, including the above-mentioned 8 entities, traded among themselves on
145 days. It was observed that the volume of trades undertaken by the PP group
entities contributed significantly to the daily market volume in the scrip on BSE during
the investigation period ranging from 0.90% on March 08, 2010 to 95.07% on April
09, 2010. Out of 145 trading days on which the PP group entities traded among
themselves, on 68 trading days the trades executed by the PP group entities
contributed to more than 50% of the total market volume in the scrip.
Further, it was observed that out of 145 trading days in which the PP group entities
traded amongst themselves, on 125 trading days the PP group entities, the abovementioned 8 entities executed synchronised trades i.e. trades in which both buy and
sell orders were placed within a time difference of one minute. It was observed that the
synchronised trades executed by PP group entities, including the 8 above-mentioned

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Order in the matter of LGS Global Limited
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viii.

entities, contributed significantly to the daily market volume, ranging from 0.30% on
August 31, 2009 to 88.88% on February 15, 2010. Out of 125 trading days, on 11
trading days PP group entities, including the 8 above-mentioned entities, contributed
to more than 50% of the total market volume through synchronised trades.
Out of 58,054 trades during the investigation period, the PP group entities, including
the above-mentioned 8 entities, entered into 12,901 buy transactions. Further, it was
observed that out of 12,901 trades 3,157 trades took place at a price less than LTP
(contributing a gross fall in price by 1008.80), 5,894 trades took place at a price equal
to LTP and 3,850 trades at a price greater than LTP (contributing a gross increasing in

ix.

price by 1630.25).
It was observed that during the period under investigation, the price of the scrip of
LGS opened at 25.75 and touched a high of 139.40, i.e. an increase of 113.65 in a
span of less than 3 months.

5. The afore discussed actions on part of the above mentioned 8 entities i.e. execution of
synchronized and self trades, creation of artificial volume and price manipulation distorted
the market equilibrium and were also found to be fraudulent in nature. Consequently, a
Show Cause Notice dated September 30, 2014 was issued to the above mentioned 8
entities (hereinafter collectively referred to as "the Noticees") calling upon them to show
cause as to why suitable directions under section 11B read with section 11(4) of the SEBI
Act should not be issued against them for the alleged violation of the provisions of
regulations 3 (a), (b), (c), (d), 4(1), 4(2) (a),(b) (e) and (g) of the SEBI (Prohibition of
Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003
("PFUTP Regulations"). The provisions of the Regulations alleged to have been
contravened by the Noticees are reproduced hereunder:

Regulation 3. Prohibition of certain dealings in securities

3. 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.

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Regulation 4. Prohibition of manipulative, fraudulent and unfair trade practices

4. (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) indulging in an act which creates false or misleading appearance of trading in the securities market;
(b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate
only as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or
avoidance of loss;
(c) ................................................................................................
(d) ...............................................................................................
(e) any act or omission amounting to manipulation of the price of a security;
(f) ................................................................................................
(g) entering into a transaction in securities without intention of performing it or without intention of
change of ownership of such security;
6. Vide separate letters dated October 15, 2014, Mr. Bhavesh Pabari and Mr. Bharat Shantilal
Thakkar sought copies of certain documents which were provided to them vide letters
dated December 15, 2014. Vide separate letters dated October 17, 2014, Mr. Bipin Jayant
Thaker, Mr. Hemant Madhusudan Seth, Ms. Mala Hemant Seth and Mr. Ankit Sanchaniya
sought copies of certain documents which were provided to them vide letters dated
December 15, 2014. Vide letter dated October 18, 2014, Mr. Prem Mohanlal Parikh sought
copies of certain documents which were provided to him vide letter dated December 15,
2014.
7. All the Noticees except Mr. Kishore Chauhan and Mr. Ankit Sanchaniya filed their replies
to the SCN vide separate letters. As regards, Mr. Kishore Chauhan, it has been brought to
my notice that during the adjudication proceedings in the same matter, one Ms. Rupal K.
Chauhan, claiming to be wife of Mr. Kishore Chauhan, has informed SEBI that Mr.
Kishore Chauhan had passed away on May 29, 2013 and had enclosed a certified copy of
the death certificate as issued by the Department of Health and Family Welfare,
Government of Gujarat, in support thereof. The replies of the Noticees are summarized as
under:
i.

Mr. Bhavesh Pabari vide his letter dated February 17, 2015 submitted the following:

That he had requested a copy of all the material / documents relied upon by SEBI
in the matter such as a copy of the complains, copy of KYC forms, details of
alleged fund transfers, details of trades executed by him, copies of trade logs, order
logs etc. but he was not provided with the same.

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Order in the matter of LGS Global Limited
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ii.

iii.

He sought an opportunity to cross-examine any person whose statement has been

relied upon by SEBI.

Since proceedings were issued against him by the Adjudicating Officer and a Show
Cause Notice was issued to him therein, he had already submitted his reply before
the Adjudicating Officer.

Hard copies of trade logs and Order logs were provided in CD format and there
was difficulty to purify the data which was in whole. The action proposed report
was not enclosed with the documents provided.

There is no denial that he was not a director in Rajnandi Yarns Private Limited but
the decision of investment of Rajnandi Yarns Private Limited was taken in
company board meeting and not at an individual level.

He does not have any business relationship with other Noticees involved.

The documents furnished have failed to provide any documentary evidence to

prove the relationship.

A penalty of 5,00,000/- was imposed on the Noticee by the Adjudicating Officer

which has been appealed against in SAT and the Noticee is aggrieved by the
Interim Order and the Confirmatory order passed against him making him unable
to have any financial means and capacity to take service of legal consultation and
represent his case in the present proceedings.

It is alleged in the SCN that he and Mr. Bharat Thakkar shared common address.
But on a perusal of the KYC is may be noticed that the address of Mr. Bharat
Thakkar is on the 3rd floor flat no. 32 and that of the noticee is 1st floor flat no. 6.

Mr. Bipin Jayant Thaker vide letter dated February 18, 2015 submitted the following:

Since proceedings were issued against him by the Adjudicating Officer and a Show
Cause Notice was issued to him therein, he had already submitted his reply before
the Adjudicating Officer.

The action proposed report was not enclosed with the documents provided.

A penalty of 5,00,000/- was imposed on him by the Adjudicating Officer which

has been appealed against in SAT and he is aggrieved by the Interim Order and the
Confirmatory order passed against him making him unable to have any financial
means and capacity to take service of legal consultation and represent his case in
the present proceedings.

In the SCN it has been stated that Mr. Chirag Jariwala introduced him to Arcadia
Shares and Stock Brokers Ltd. However, from the KYC it is seen that he is not the
introducer but the witness to the said form.

Mr. Prem Mohanlal Parikh vide letter dated February 17, 2015 submitted the
following:

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Order in the matter of LGS Global Limited
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iv.

v.

Since proceedings were issued against him by the Adjudicating Officer and a Show
Cause Notice was issued to him therein, he had already submitted his reply before
the Adjudicating Officer.

The action proposed report was not enclosed with the documents provided.

A penalty of 5,00,000/- was imposed on him by the Adjudicating Officer which

has been appealed against in SAT and he is aggrieved by the Interim Order and the
Confirmatory order passed against him making him unable to have any financial
means and capacity to take service of legal consultation and represent his case in
the present proceedings.

Mr. Hemant Madhusudan Seth vide letter dated February 18, 2015 submitted the
following:

Since proceedings were issued against him by the Adjudicating Officer and a Show
Cause Notice was issued to him therein, he had already submitted his reply before
the Adjudicating Officer.

Hard copies of trade logs and Order logs were provided in CD format and there
was difficulty to purify the data which was in whole. The action proposed report
was not enclosed with the documents provided.

Though he has not denied that he was not a director in Rajnandi Yarns Private
Limited, but the decision of investment of Rajnandi Yarns Private Limited, was
taken in company board meeting ant not at an individual level.

The documents furnished have failed to provide any documentary evidence to

prove the relationship.

A penalty of 5,00,000/- was imposed on him by the Adjudicating Officer which

has been appealed against in SAT and he is aggrieved by the Interim Order and the
Confirmatory order passed against him making him unable to have any financial
means and capacity to take service of legal consultation and represent his case in
the present proceedings.

Ms. Mala Hemant Seth vide letter dated January 31, 2015 submitted the following:

Since proceedings were issued against her by the Adjudicating Officer and a Show
Cause Notice was issued to her therein, she had already submitted her reply before
the Adjudicating Officer.

Hard copies of trade logs and Order logs were provided in CD format and there
was difficulty to purify the data which was in whole. The action proposed report
was not enclosed with the documents provided.

Though she had fund movement with some other entities of the PP group she did
not form a part of the said group.

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Order in the matter of LGS Global Limited
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vi.

She has no business relationship with other Noticees and documents furnished
along with the SCN have failed to provide any documentary evidence to prove the
relationship.

While it is true that she is the wife of Mr. Hemant Madhusudan Seth, she did not
have any business/ professional connection with him and she is living an
independent life and is taking her own independent decisions.

A penalty of 5,00,000/- was imposed on her by the Adjudicating Officer which

has been appealed against in SAT and she is aggrieved by the Interim Order and
the Confirmatory order passed against her making her unable to have any financial
means and capacity to take service of legal consultation and represent his case in
the present proceedings.

Mr. Bharat Shantilal Thakkar vide letter dated February 18, 2015 submitted the
following:

Since proceedings were issued against him by the Adjudicating Officer and a Show
Cause Notice was issued to him therein, he had already submitted his reply before
the Adjudicating Officer.

The action proposed report was not enclosed with the documents provided.

A penalty of 5,00,000/- was imposed on him by the Adjudicating Officer which

has been appealed against in SAT and he is aggrieved by the Interim Order and the
Confirmatory order passed against him making him unable to have any financial
means and capacity to take service of legal consultation and represent his case in
the present proceedings.

It is alleged in the SCN that Mr. Bavesh Pabari and Mr. Bharat Shantilal Thakkar
shared common address. But on a perusal of the KYC is may be noticed that his
address is on the 3rd floor flat no. 32 and that of Mr. Bhavesh Pabari is 1st floor flat
no. 6.

8. In addition to the aforesaid submissions, the Noticees have made a common submission
that their Memoranda of Appeal filed before Securities Appellate Tribunal may also be
taken on record and the submissions made therein shall also be considered as their
submissions in response to the SCN in the present proceedings. I note that the Noticees
have inter alia made the following common submissions in their respective appeal
memorandum:
a) The Adjudicating Officer's order is based on a totally erroneous and untenable
assumptions and interpretation of the law and in violation of basic principles of natural
justice.

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Order in the matter of LGS Global Limited
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b) All documents which were relied upon in the show cause notice issued by the
Adjudicating Officer was not provided to them
c) No relationship between the Noticees m and the remaining entities of the PP group has
been established.
d) The trades executed by the Noticees were genuine and bona fide and they received
consideration of the same.
e) Their quantities of the shares purchased and sold by the Noticees were miniscule and
therefore the same could not have had any impact on the creation of artificial volume
and price manipulation in the scrip of LGS.
9. An opportunity of personal hearing was granted to the Noticees on February 26, 2015.
None of the Noticees appeared for the hearing except Mr. Bhavesh Pabari who appeared
and made his submissions in line with his reply. Since the hearing notice issued to Mr.
Ankit Sanchaniya was returned undelivered, a second opportunity of hearing was granted
to him on May 05, 2015. However, he did not appear for the hearing.
10. I have considered the allegations levelled against the Noticees in the SCN, replies made by
the Noticees in response thereto and other material on record. At the outset, I find that in
the present proceedings, the principles of natural justice have been duly followed as all the
Noticees were given an opportunity to file their replies/written submissions and also with
opportunities of hearing. The Noticees (who did not appear for the hearing) have
mentioned in their replies that they are not in a position to attend personal hearing and
present their case before me. Further the SCN does not rely upon the statement of any
person for the purpose of the allegations levelled against the Noticees therein. Therefore
the question of providing an opportunity to cross-examine any person whose statement
has been relied upon, does not arise. I now proceed to deal with the present proceedings
on merit on the basis of the replies/written submissions of the Noticees on record.
11. The Noticees have made a common submission that the action proposed chart had not
been provided to them and that the trade logs and order logs were provided in a CD
format due to which the Noticees were unable to purify the data pertaining to them. I have
perused the documents sought by the entities and the documents furnished to them. I note
that all such relevant documents that were relied upon in the Show Cause Notice have
been duly provided to the Noticees. Further, due to the voluminous nature of the trade
logs and order logs, the same were given through a compact disc. I, therefore, am of the
view that the relevant documents/material which was relied upon in the SCN in the
present proceedings has been provided to the Noticees. In view thereof, I reject the
submissions of the Noticees in this regard.
12. Mr. Bhavesh Pabari and Mr. Hemant Madhusudan Seth have contended that though they
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Order in the matter of LGS Global Limited
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were directors in Rajnandi Yarns Private Limited, the decision regarding investment of
Rajnandi Yarns Private Limited was taken in company's board meeting and not at an
individual level. In this regard I note that several off market transactions have been entered
into between the PP group entities including the Noticees and Rajnandi Yarns Private
Limited the details of which are as under:
Table 2 - Fund movement with Raj Nandi Yarns Private Limited
Date

Client Name

Counterparty Client Name

10/02/2010

Chirag Jariwala

15/02/2010

Kishore Chauhan

18/08/2010

Bharat Shnatilal Thakkar

Raj Nandi Yarns Private

Limited
Raj Nandi Yarns Private
Limited
Raj Nandi Yarns Private
Limited

Total
Quantity
25000
195000
25000

13. It is noted that Mr. Bhavesh Pabari is the nephew of Mr. Bharat Shantilal Thakkar with
whom Rajnadi Yarns Ltd. has fund movements. Moreover, Mr. Bhavesh Pabari and Mr.
Bharat Shantilal Thakkar also have fund movements among themselves. It is also noted
that Mr. Chirag Jariwala is the nephew of Mr. Bhavesh Pabari and has fund movements
with him. Even Mr. Kishore Chauhan had fund movement with Mr. Bhavesh Pabari.
Further, as shown in Table 1 above, Mr. Hemant Madhusudan Seth was connected to Mr.
Bhavesh Pabari and other PP group entities through fund movements, of market transfer
of shares and other factors. Therefore, the contention of Mr. Bhavesh Pabari and Mr.
Hemant Madhusudan Seth that they had no role in the investment decisions of Rajnandi
Yarns Private Limited cannot be accepted.
14. Another Noticee, Ms. Mala Hemant Seth has accepted fund movement with certain
Noticees. She has further stated that while it is true that she is the wife of Mr. Hemant
Madhusudan Seth, she denies having any business/ professional connection with him and
submits that she is living an independent life and is taking her own independent decisions.
I note that Ms. Mala Hemant Seth also has fund movements and off market transactions
with Mr. Bhavesh Pabari and Mr. Prem Mohanlal Parikh. Vide her letter dated July 8,
2012; a copy of which has been provided to her, it has been admitted by Ms. Mala Hemant
Seth that the transaction in the securities market in her name were handled by her husband
Mr. Hemant Madhusudan Seth. I, therefore, do not find any merit in her submission noted
above.
15. With respect to the submissions made by Mr. Bipin Jayant Thaker, I note that vide letter
dated July 11, 2012 submitted by the Mr. Bipin Jayant Thaker to SEBI, he has accepted
that Mr. Bhavesh Pabari was his nephew.
__________________________________________________________________________
Order in the matter of LGS Global Limited
Page 12 of 19

16. I note that the details of the relationship amongst the Noticees, their trade logs and their
off market transactions have been sufficiently detailed and were also furnished to the
Noticees along with the SCN. Such relations and transactions have not been disputed.
17. Further, Mr. Bhavesh Pabari has submitted that he and Mr. Bharat Shantilal Thakkar do
not share a common address since their flat numbers are different. In this regard, I note
that as per their own admission, they live in the same building but on different floors.(i.e.
1st and 3rd). Also it is not disputed that Mr. Bhavesh Pabari is the nephew of Mr. Bharat
Shantilal Thakkar. Thus, even if the technical argument is accepted that they were residing
on different floors of the same building, the connection between them shown in the SCN
cannot be disputed.
18. The Noticees have made a common contention that they were not related to each other.
In this regard, I note that the relationship / connection among the PP group entities as
illustrated in the SCN has been established on the basis of a multiplicity of factors
including family relationship, common address, bank account details, fund movements
share transfers in off-market etc. Other than a general denial, the Noticees have not
produced any satisfactory material/documents to dispute the inferences regarding their
inter-se relationship brought out in SCN. In my view, it cannot be a mere coincidence that
the Noticees while trading in the scrip of LGS ended up trading amongst each other only
and collectively contributed to more than 50% of the total traded volume during the
investigation period. Further, the details of the synchronized and self trades among the
Noticees were also provided to the Noticees in the SCN in response whereof they have
not provided any cogent explanation. In this regard, It is pertinent to note that the Hon'ble
SAT has, in many cases such as Classic Credit Ltd. vs. SEBI (SAT Appeal no. 68/2003, Order
dated December 8, 2006), Classic Credit Ltd. vs. SEBI (SAT Appeal no. 76/ 2003, Order dated
January 9, 2007) and Veronica Financial Services Ltd. vs. SEBI (SAT Order dated August 24,
2012), held that connection/relations can be established on the basis of such factors. In
view of the above, I reject the contention of the Noticees in this regard.
19. The Noticees have raised another common contention that the transactions carried out by
them were genuine and bona fide and the quantities of their transactions were so minuscule
that they could not have led to creation of artificial volume and price manipulation in the
scrip of LGS. In this regard, I note that the SCN clearly brings out that there have been
number of transactions among the Noticees which were synchronized with the orders with
identical rates placed within a span of less than one minute. The particulars of the
synchronised trades carried out by the Noticees are as under:

__________________________________________________________________________
Order in the matter of LGS Global Limited
Page 13 of 19

Table 3 - Synchronized trades by the Noticees.

Sl. Client
No. Name

1. Bharat
Shantilal
Thakkar
2. Bipin Jayant
Thaker
3. Kishore
Chauhan
4. Bhavesh
Pabari
5. Prem
Mohanlal
Parikh
6. Hemant
Madhusudan
Sheth
7. Mala
Hemant
Sheth
8. Ankit
Sanchaniya

Synchronised % of
% of
Synchronised % of
% of
buy trade
synchronised Market sell trade
synchronised Market
trades to
Volume
trades to
Volume
total buy by
total sell by
client
client
120195

10.21

0.59

77632

6.58

0.38

49386

7.61

0.24

23177

4.12

0.11

69500

7.44

0.34

54997

7.62

0.27

28149

4.02

0.14

24734

3.60

0.12

57062

6.34

0.28

73036

11.63

0.36

108777

3.67

0.53

213521

8.22

1.05

0.00

0.00

8500

2.65

0.04

28101

3.08

0.14

36150

4.13

0.18

20. Placing of the sell orders with same counterparties for same quantity of shares at the same
price within nil or negligible time difference repeatedly over a period of time is a clear
indication that those trades of the Noticees were synchronised/structured. In this regard,
the following observations of the Honble SAT in its order dated July 14, 2006 in the
matter of Ketan Parekh vs. Securities and Exchange Board of India, are worth mentioning:
.......... A synchronised transaction will, however, be illegal or violative of the Regulations if it is
executed with a view to manipulate the market or if it results in circular trading or is dubious in
nature and is executed with a view to avoid regulatory detection or does not involve change of beneficial
ownership or is executed to create false volumes resulting in upsetting the market equilibrium. 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 manipulate the market
or defeat its mechanism will depend upon the intention of the parties which could be inferred from the
attending circumstances because direct evidence in such cases may not be available. The nature of the
transaction executed, the frequency with which such transactions are undertaken, the value of the
transactions, whether they involve circular trading and whether there is real change of beneficial
__________________________________________________________________________
Order in the matter of LGS Global Limited
Page 14 of 19

ownership, the conditions then prevailing in the market are some of the factors which go to show the
intention of the parties. This list of factors, in the very nature of things, cannot be exhaustive. Any one
factor may or may not be decisive and it is from the cumulative effect of these that an inference will have
to be drawn.
21. I also note that the Noticees executed multiple self trades wherein one or the other
Noticee was on either side of the transaction thereby creating artificial volume in the scrip.
The details of the self trades executed by the Noticees are as below:
Table 4 - Self trades by the Noticees.
Sl. No.

1.
2.
3.
4.
5.
6.
7.
8.

Client Name

Total
Buy

Total
Sale

Self
trade
qty

% of
Total
Buy

%
Tota
l
Sale

% of No of
Mark Self
et
trades
Volu
me

Bharat Shantilal
Thakkar
Bipin Jayant
Thaker
Kishore Chauhan
Bhavesh Pabari
Prem Mohanlal
Parikh
Hemant
Madhusudan
Sheth
Mala Hemant
Sheth
Ankit Sanchaniya

1176987

1179456

23264

1.98

1.97

0.11

22

648777

562659

26898

4.15

4.78

0.13

26

934416
700032
900352

722216
686402
627742

1000
28860
79563

0.11
4.12
8.84

0.14
4.20
12.67

0.00
0.14
0.39

1
9
18

2960225

2599035

484619

16.37

18.65

2.38

138

320268

320756

8725

2.72

2.72

0.04

912651

875458

43410

4.76

4.96

0.21

22. The above self-trades clearly did not involve change in beneficial ownership of traded
shares and were, therefore, illegal. It is relevant to mention that with regard to the nature
and effect of self-trades the Honble SAT, in the matter of M/s. Jayantilal Khandwala & Sons
Pvt. Ltd. vs. SEBI (Appeal no. 24 of 2011 decided on June 8, 2011), has held that : one
cannot buy and sell shares from himself. Such transactions are obviously fictitious and meant only to create
false volumes on the trading screen of the exchange.
23. It is also important to note that in all these self trades mentioned above, the buy and sell
stock brokers were also the same. The detail of the self trades undertaken by stock brokers
is placed below:
__________________________________________________________________________
Order in the matter of LGS Global Limited
Page 15 of 19

Table 5 - Stock brokers through whom the Noticees executed self trades.
Buy and Sell Stock
Broker Name
Arcadia Share & Stock
Brokers Pvt. Ltd.

Client Name

Fairwealth Securities Pvt.

Ltd.

Ankit Rajendra Sanchaniya

Bharat Shantilal Thakkar
Bhavesh Pabari
Bipin Jayant Thaker
Hemant Madhusudan Sheth
Kishore Chauhan
Ankit Rajendra Sanchaniya

Total Traded
Qty
3762
12154
110
1499
200
1000
500

No. of Trades
2
19
2
2
1
1
1

24. It is also noted that during the period under investigation, the price of the scrip of LGS
opened at 25.75 and touched a high of 139.40, i.e. an increase of 113.65. Further,
on 42 trading days and 380 occasions a new high price was discovered. Out of 380
occasions, on 162 occasions (on 19 days of 42 days), all of the Noticees except Mr. Prem
Mohanlal Parikh contributed to an increase in the price to 49.55 (out of 113.65).
25. In addition to the above, the PP group entities including the Noticees had indulged in
off-market transfer of 11,90,750 shares of LGS amongst themselves (during the period
January 01, 2009 and January 31, 2011) which further corroborated the connection among
them. The details of the off market transactions undertaken by the Noticees are as under:
Table 6- Off-market transactions by the Noticees.
Sr.
No

Name

1. Bharat Thakkar
2. Bipin Thaker
3. Kishore
Chauhan
4. Prem Parikh
5. Hemant Seth
6. Ankit
Sanchanya
7. Bhavesh Pabari

No.
of
shares
transferred
to
group
members
2500
57601
201000

No.
of
instances

No. of
instan
ces

1
3
2

No
of
shares
received
form group
members
57144
0
0

19500
179100
28000

2
5
2

0
40000
147601

0
1
3

71600

4
0
0

26. This large scale trading amongst the PP group entities, which included the Noticees, all of
which were synchronized and did not result in change in ownership created an artificial
demand in the scrip of LGS and led to a price rise which was misleading and
disadvantageous to the genuine investors in the securities market.
__________________________________________________________________________
Order in the matter of LGS Global Limited
Page 16 of 19

27. In view of the above, I find that the Noticees in the present proceedings were related /
connected to each other and connived amongst themselves for execution of synchronized
and self trades, creation of artificial volume and price manipulation which not only
distorted market equilibrium but were also found to be fraudulent in nature. The Noticees
have therefore violated the provisions of regulations 3 (a),(b),(c),(d), 4(1), 4(2) (a),(b) (e)
and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to
Securities Market) Regulations, 2003.
28. The Noticees have submitted that based on the same set of facts and transactions as in the
instant case monetary penalties were imposed against the Noticees by the adjudicating officer
vide his separate order(s) and the Noticees have challenged the said order(s) before SAT.
However, I am satisfied that the contraventions as found in this case are grave and have the
potential to disturb the market integrity and disturb the fair, equitable and efficient
functioning of the securities market. In the instant case, the proceedings under sections 11
and 11B of the SEBI Act have been initiated against the Noticees in addition to the
adjudication proceedings against them as the charges against the entities are grave and have
larger implications on the safety and integrity of the securities market. In my view, for the
serious contraventions as found in the instant case, monetary penalty alone would not be
sufficient to safeguard the market integrity. In this regard, the following observations of the
Honble SAT in the order dated December 02, 2010, in Appeal no. 70 of 2010 Yashraj
Containeurs Ltd. v. SEBI are worth mentioning:
.... we cannot resist observing that in view of the serious allegations made against the appellants which
stand established during the course of the adjudication proceedings, the Securities and Exchange Board of
India (for short the Board) should not have been content with initiating only adjudication proceedings
against the appellants in which only a monetary penalty could be levied. This is a fit case where the Board
should have considered initiating proceedings under Sections 11 and 11B of the Securities and Exchange
Board of India Act, 1992 for issuing appropriate directions against the appellants to protect the integrity
of the market and the interests of the investors....
This is, indeed a very serious market illegality/irregularity and, in our view, imposing a monetary penalty
alone on the company and its promoters will not meet the ends of justice. We are constrained to make
these observations because the lenient view taken by the Board does not, in our opinion, protect the
integrity of the market and not even the interest of the investors which is its primary duty. This kind of a
lenient view will not be a deterrent for others and would send a wrong signal that the delinquent could
continue with their nefarious activities by paying a monetary penalty.
29. I note that vide the interim order dated February 02, 2011, SEBI had restrained, inter alia, the
Noticees herein from accessing the securities market and further prohibited them from
buying, selling or dealing in securities in any manner whatsoever, till further directions.
__________________________________________________________________________
Order in the matter of LGS Global Limited
Page 17 of 19

The directions in the interim order qua these Noticees are still in force. I also note from the
material on record that Mr. Kishore Chauhan has passed away on May 29, 2013 and
therefore, these proceedings against him have abated and the SCN dated November 30,
2014 as against him is disposed off accordingly.
30. It is important to mention that the Noticees in the present proceedings, against whom the
allegations levelled in the SCN have been established, have already been restrained by
SEBI vide order dated May 13, 2015 (in the matter of dealings in the shares of Goldstone
Technologies Limited) from accessing the securities market and have been further
prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or
being associated with the securities market in any manner for a period of 5 years. It is
noteworthy that the said restraint has been imposed on the Noticees for indulging in
fraudulent and manipulative acts in violation of the PFUTP Regulations as has been found
in the present case. In my view, repeated fraudulent acts and delinquent behaviour of the
erring Noticees does not bode well for the integrity, orderly development and smooth
functioning of the securities market. It, therefore, becomes incumbent to deal with
contraventions, digression and demeanour of the erring Noticees sternly and
take appropriate actions for effective deterrence.
31. In view of the above and considering the repetitive nature of the default by the Noticees, I,
in order to protect the interest of investors and the integrity of the securities market, in
exercise of the powers conferred upon me under section 19 of the Securities and
Exchange Board of India Act, 1992 read with sections 11 and 11B thereof and regulation
11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair
Trade Practices Relating to Securities Market) Regulations, 2003 hereby restrain the
following entities from accessing the securities market and further prohibit them from
buying, selling or otherwise dealing in securities, directly or indirectly, or being associated
with the securities market in any manner, whatsoever, for the period as mentioned in the
table below:
Sl. No.

Name of the Noticees

PAN

Period

1.

Mr. Bhavesh Pabari

AKGPP8679N

6 Years

2.
3.

Mr. Bipin Jayant Thaker

Mr. Prem Mohanlal Parikh

ABYPT4984H
ALHPP3489N

6 Years
6 Years

4.
5.

Mr. Hemant Madhusudan Seth ANOPS8607E

Ms. Mala Hemant Seth
AZXPS0694J

6 Years
6 Years

6.
7.

Mr. Ankit Sanchaniya

Mr. Bharat Shantilal Thakkar

6 Years
6 Years

BLNPS3316L
AAZPT9542R

32. The period of prohibition already undergone by the Noticees pursuant to the interim order
__________________________________________________________________________
Order in the matter of LGS Global Limited
Page 18 of 19

dated February 02, 2011, shall be taken into account for the purpose of computing the
period of prohibition imposed in this order. Further, it is clarified that the
restraint/prohibition imposed on the Noticees hereinabove shall run concurrently with the
restraint/prohibition imposed by SEBI vide order dated May 13, 2015 in the matter of
dealings in the shares of Goldstone Technologies Limited.
33. This order shall come into force with immediate effect. A copy of this order shall be
served on all recognized stock exchanges and depositories to ensure that the direction
given in the above paragraph are complied with.

Sd/DATE: June 29th, 2015

PLACE: MUMBAI

RAJEEV KUMAR AGARWAL

WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

__________________________________________________________________________
Order in the matter of LGS Global Limited
Page 19 of 19