Regulations
CIC asks SEBI to disclose insider trading probe details in Reliance Petroleum

CIC asked the market regulator to make public names of entities which were allegedly involved in the insider trading of shares of Reliance Petroleum in 2007

 
New Delhi: The Central Information Commission (CIC) has directed the Securities and Exchange Board of India (SEBI) to make public names of entities which were allegedly involved in the insider trading of shares of Reliance Petroleum in 2007, reports PTI.
 
"If as a regulator, the SEBI took cognisance of allegations of any breach of law, rules or regulations by one or more entities for unlawful private gain, the information generated in the process of its investigation needs to be disclosed in the public domain," Chief Information Commissioner Satyananda Mishra said in an order on the plea of Right to Information (RTI) applicant Arun Agrawal.
 
The case relates to RTI application filed by Agrawal who had sought to know from the SEBI names of individuals, partners, directors and major shareholders (in case of companies) involved in the short sale of shares of Reliance Petroleum in November 2007.
 
He had also sought the name of brokers through which the alleged short sales deal was routed.
 
Mishra said such disclosure would keep the general public informed and educated about the risks they may confront in making the investments in the market.
 
"It would also prevent many entities from adopting shortcuts to make profit through unlawful means. The argument that at the end of the quasi-judicial proceedings, the charged entities may be found innocent cannot be an argument against disclosing the information," Mishra said. 
 
In another application, Agrawal wanted copies of the investigation report or the details of the consent order proceedings undertaken by SEBI in connection with the case.
 
In both cases, CPIO had denied the information citing exemption clauses of the RTI Act relating to information being part of quasi-judicial proceedings and that information is of commercial confidence.
 
During the hearing, Agrawal submitted that insider trading allegedly by Reliance Industries Ltd (RIL) had been widely reported in the press at the relevant time and it was believed that an alleged illegal gain of more than Rs500 crore had been made.
 
He said that larger public interest warrants that such information be disclosed.
 
Both the arguments cited by SEBI officials were overruled by Mishra who agreed with the submissions made by Agrawal.
 
"The CPIO has invoked the provisions of subsection 1(d) and (h) of the section eight of the RTI Act in denying the information. Subsection 1(d) clearly provided that even information in the nature of commercial confidence of trade secret or intellectual property could be disclosed if the larger public interest warrants the disclosure" Mishra said.
 
He said subsection 1(h) is not attracted in the case because the investigation is already over.
 
"We are of the view that these two items of information should be disclosed (a) in public interest and (b) not being covered by any exemption provision," he said ordering SEBI to disclosed the information within 10 days of receiving the order.
 

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SAT upholds SEBI move to impose penalty on five people

SEBI found that 10 entities including the five individuals transferred or received shares in off-market transactions in respect of 70.78 lakh shares of Indo Pacific Software and Entertainment

 
Mumbai: The Securities Appellate Tribunal (SAT) upheld Securities and Exchange Board of India (SEBI)'s move to impose penalties on five individuals for indulging in off market transactions in shares of Indo Pacific Software and Entertainment Ltd and not furnishing necessary information to the regulator, reports PTI.
 
In a common order issued against the five individuals, SAT has upheld SEBI's penalty of Rs 3.50 lakh each on -- Bharat Shantilal Thakkar, Kishore Balubhai Chauhan, Hemant Madhusudan Sheth, Prem Mohanlal Parikh and Bhavesh P Pabari -- for failing to appear before SEBI and provide the required information as per summons issued.
 
Further, SAT upheld the fine of Rs3 lakh on Pabari, Rs2 lakh each on Sheth and Parekh and and another Rs1.50 lakh each on Thakkar and Chauhan for indulging in off market deals in scrip of Indo Pacific Software and Entertainment, a notification said.
 
SAT noted that the five entities were found to have entered into certain transactions which were 'prima facie undesirable' and 'for which no proper explanation was offered' by them, the notification added.
 
The matter relates to a probe in the trading in the scrip of Indo Pacific Software and Entertainment that is into providing software development, entertainment activities, among others.
 
The regulator found that 10 entities including the five individuals transferred/ received shares in off-market transactions in respect of 70.78 lakh scrips of the company.
 
The entities were directed by SEBI to explain the circumstances leading to the off market transfers to which they submitted that the transactions were in the nature of repayment of old loans, advancement of new loans.
 
Thereafter investigating authority of SEBI called for specific details regarding the alleged off market transfers, the notification said.
 
However, after a series of correspondence asking for information the investigating officer concluded that the queries raised during the investigation were not answered fully by the appellant and there was default in responding to the summons issued by the authorities, it added.
 
SEBI had also alleged that the entities had failed to furnish evidence for the off market transfers as contended by them.
 

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SEBI slaps Rs2 lakh fine on Dynamic Stock Broking in Pyramid Saimira case

SEBI found Dynamic Stock Broking was one such entity which facilitated Nirmal Kotecha, one of the promoters and the largest shareholder of Pyramid Saimira then, to create artificial volumes in the company shares

 
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has slapped a fine of Rs2 lakh on brokerage firm Dynamic Stock Broking for its alleged role in the Pyramid Saimira Theatres Ltd (PSTL) share manipulation case, reports PTI.
 
SEBI said it has imposed "a penalty of Rs2 lakh on the noticee (Dynamic Stock Broking) which will be commensurate with the violations committed by it." 
 
In a probe conducted by SEBI, the market regulator said it had found the brokerage firm was one such entity which facilitated Nirmal Kotecha, one of the promoters and the largest shareholder of PSTL then, to create artificial volumes in the scrip of the company, thereby misleading innocent investors in the market.
 
The regulator said it was also revealed that the entity had carried out synchronised trades and created artificial volumes in the scrip of PSTL that too hugely only on 22 December 2008.
 
"...noticee created artificial volume and helped Kotecha to off load his stake in the market," SEBI said its order dated 7th November.
 
Earlier in April 2009, SEBI through an interim order had prohibited the brokerage firm among others from entering into any fresh agreements with new clients, which was further confirmed in July 2010.
 
The broking firm was penalised for violating the code of conduct for stock brokers prescribed by the SEBI.
 
The case pertains to alleged manipulation of PSTL shares by promoter P Saminathan with assistance from different market intermediaries to amass unlawful gains.
 
Saminathan is also alleged to have forged a SEBI letter that reportedly allowed PSTL to make an open offer for an additional 20% stake in the company.
 

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