Sebi today barred an individual from the trading in the capital markets for a period of three years for fraudulent trading practices in shares of various securities.
The market watchdog had found that in 2010 Kamal Jitendra Katkoria had traded ahead of one Colin P Shah based on the prior knowledge about the trades and executed matched trades with Shah and created an artificial volume thereby disturbing the market equilibrium and normal price discovery mechanism of the stock exchanges.
"The pattern of transactions as described in the show- cause notice suggests that noticee (Katkoria) did indulge in fraudulent trading by way of placing orders ahead of Colin's orders based on the prior knowledge about Colin's trades as alleged in the show-cause notice," Securities and Exchange Board of India (Sebi) said in the order today.
"...Hereby restrain Kamal J Katkoria from accessing the securities market and also prohibit them from buying, selling, and otherwise dealing in securities market, directly or indirectly, in any manner whatsoever, for a period of three years from the date of this order," the regulator said.
Sebi noted that Katkoria had placed trading orders using Colin's e-mail id and was admittedly an employee of Colin during the relevant time of occurrence of the transactions.
"In these facts and circumstances, the preponderance of probability is that though the noticee might have placed orders on behalf of his employer Colin on his instructions, he had also indulged in such fraudulent transactions for himself independently," Sebi said.
It noted that while the role of Katkoria in the trades is established, the probable role of Shah has not been examined.
Accordingly, Sebi said that in view that any ill-gotten gain made by Katkoria cannot be computed with certainty at this stage, the role of Shah in the impugned transactions and profit, if any, earned by him also "need to be investigated".
"It also needs to be ascertained, by further investigation in the matter, as to how much ill- gotten profit the noticee earned on account of his trades," it added.
Sebi had probed Katkoria for trading in 14 scrips each on NSE and the BSE during January 1 to December 31, 2010.
