Regulations
SAT upholds SEBI's Rs8 lakh fine on Sandeep Jain in Asian Star case

SAT said if a person indulges in fraudulent and unfair trade practices relating to securities, he would be liable to a penalty of Rs25 crore or three times the amounts of profit made out, but SEBI has charged Rs8 lakh

Mumbai: The Securities Appellate Tribunal (SAT) has upheld Securities and Exchange Board of India (SEBI)'s penalty of Rs8 lakh on one Sandeep Jain for allegedly indulging in fraudulent trading practices in shares of Asian Star Company Ltd (ASCL), reports PTI.

 

SEBI in its probe had identified Jain as one of the persons involved in manipulative trades in ASCL shares.

 

In its order, SAT said that it was "fully satisfied that the adjudicating officer (of SEBI) has placed sufficient material on record to conclude that the transactions were manipulative in nature".

 

Jain in his letter to SEBI dated 27 January 2009 has not denied these transactions, it added.

 

Besides, Jain had submitted to SAT that that the penalty was "excessive" and "grossly disproportionate".

 

However, SAT said it observed that if a person indulges in fraudulent and unfair trade practices relating to securities, he would be liable to a penalty of Rs25 crore or three times the amounts of profit made out of such practices, whichever is higher.

 

"The adjudicating officer has imposed a penalty of Rs8 lakh only. We do not find it disproportionate to the allegation established against the appellant (Jain)," SAT added.

 

SEBI had conducted a probe in shares of ASCL and noticed a wide variation in the price of the scrip, during 10 October-20 November 2008.

 

The regulator found that certain entities including Jain, had indulged in circular/reversal/synchronised trades in a manner which lead of creation of artificial volume in the scrip. These entities were found to be connected to each other.

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SEBI imposes Rs20 lakh fine on Biren Shah in IPO fraud case

SEBI said Biren Kantilal Shah made a total ill gotten gain of Rs24.10 lakh while dealing as key operator in the IPOs of Suzlon Energy and IDFC

Mumbai: Capital market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs20 lakh on one Biren Kantilal Shah for his alleged fraudulent trade practices in intial public offerings (IPOs) of Suzlon Energy and Infrastructure Development Finance Co Ltd (IDFC) in 2005, reports PTI.

 

SEBI said Shah acted as a "key operator", in concert with certain other entities and was involved in the scheme of cornering of shares in the IPOs.

 

"It is observed on the basis of investigation report that Biren Kantilal Shah made a total ill gotten gain of Rs24.10 lakh while dealing as key operator," SEBI said in an order dated 18th December.

 

SEBI said Shah "had indulged in fraudulent and manipulative activities and employed deceptive device and scheme to corner the shares reserved for retail individual investors in the aforesaid two IPOs with the intention to defraud retail individual investors".

 

The case relates to a SEBI probe in shares of certain companies during their IPOs between 2003 and 2005 wherein it was found that certain entities had opened large number of demat accounts and bank accounts which were in the names of fictitious persons or were benami.

 

The entities had acquired shares of various companies in the IPOs by making applications in fictitious names with each application being of a value so as to make it eligible for allotment under the retail category.

 

Following the allotment, the shares from such fictitious allottees were transferred in the demat account of key operators like Shah before the listing on stock exchanges, SEBI said.

 

The key operators then transferred the shares through off market deals to certain entities called the "financiers".

 

SEBI said it noted that in some cases the key operators retained a portion of shares for themselves which were then sold in the market, earning them huge gains illegally.

 

As per SEBI, the scheme was designed to corner shares from the quota reserved for retail investors in the IPOs of various companies and to make profit by selling the shares.

 

In August 2010, SEBI had directed Shah to disgorge an amount of Rs30.61 lakh which included the Rs24.10 lakh gains he allegedly made through the illegal trading IPO shares.

 

Thereafter, SEBI had imposed a penalty of Rs5 lakh on Shah for his failure to disgorge the said amount.

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Midcap crash: SEBI relief to six companies, bar against two to continue

The companies which got relief from the ban are -- A to Z Steels, GN Credits, Premium Hospitality Services, 4a Financials Securities, Venus Infosoft and Neelanchal Mercantile

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) revoked its earlier order barring six entities which were initially found involved in the share price plunge in some mid-cap stocks, including Parsvnath, Tulip Telecom and Pipavav Defence, reports PTI.

 

However, the board continued its gag order against two companies - Gajria Jaayna Precision Industries and Passion System Solution -- passed on 3rd August by confirming their suspension from trading after finding "prima facie" evidence against them.

 

The companies which got relief from the earlier securities market ban are -- A to Z Steels, GN Credits, Premium Hospitality Services, 4a Financials Securities, Venus Infosoft and Neelanchal Mercantile.

 

"In view of the foregoing, I, in exercise of the powers conferred upon me... hereby confirm the directions issued against Gajria Jaayna Precision Industries and Passion System Solution and revoke the directions issued against A to Z Steels, GN Credits, Premium Hospitality Services, 4a Financials Securities, Venus Infosoft vide ad-interim ex-parte order on 3 August 2012," said SEBI in an order passed by its wholetime member RK Agarwal on 19th December.

 

Passing a separate order, SEBI also revoked ban against Neelanchal Mercantile.

 

Meanwhile, the board made it clear that investigation in this issue is still going on and SEBI may take a final view and necessary actions after that.

 

Regarding the six entities, SEBI observed that at this stage, the case has not been made out that their trades were part of any alleged plan and the investigation in the matter was still in progress.

 

"It is noted that the notice has already undergone restraint for more than four months pursuant to the interim order. In my view, in the facts and circumstances of the case, the balance of convenience is in favour of the A to Z, GN Credits, Premium, 4a Financials' and Venus at this stage," said SEBI.

 

However, regarding the two entities, SEBI said, "Gajria and Passion have not been able to make out a prima facie case for revocation of the interim order as against them and the material available on record justifies the continuation of the directions passed against 'Gajria' and 'Passion' issued under the ad interim ex-parte order dated 3 August 2012".

 

Passing an interim order on 3 August 2012 SEBI had barred 19 entities from the securities market after an initial probe into share price plunge in some mid-cap stocks, including Parsvnath, Tulip Telecom and Pipavav Defence.

 

The entities were restrained from accessing market and prohibited from buying, selling or dealing in securities in any manner whatsoever included 4a Financials Securities, A To Z Steels, Ajit Kumar Jain, Cheminare Trade Comm, GN Credits, Gajria Jayna Precision Industries, Kuvam Plast Pvt Ltd, Littlestar Vanijya Pvt Ltd, Manish Agarwal and Milestone Shares & Stock Broking Pvt Ltd.

 

The others among the 19 barred entities include Neelanchal Mercantile Pvt Ltd, North Eastern Publishing & Advertising Co, Passions System Solution, Premium Hospitality Services, Ramkripa Securities, Umang Nemani, Venus Infosoft, White Horse Trading Co and Yashika Holding Pvt Ltd.

 

The matter relates to a sharp plunge of 20-26% in the shares of Parsvnath Developers, Pipavav Defence and Offshore Engineering, Tulip Telecom and Glodyne Technoserve on 26th July at the BSE and NSE.

 

SEBI in its interim order had said that a sharp downward movement was noticed in these stocks between 0915 and 0949 hours on that day. These stocks witnessed sharp intra-day price volume movement on both BSE and NSE on 26th July, although no major corporate announcements or price sensitive information was disclosed to the exchanges by these companies during previous 15 days.

 

After analysing the trading activity of major clients, NSE and BSE found that some of these clients were not only common across these scrips but they also traded on both the exchanges.

 

A further probe into the matter found that the top identified clients whose sell volume constituted a significant share of the total sale transactions in these stocks accounted for up to 95% of the total sale transactions.

 

SEBI had said the analysis of trade data showed that these traders were instrumental in pushing down the prices of the concerned stocks, as they were observed to be placing the sell orders below the best sell prices as well as the best buy prices available on various occasions.

 

Also, during the day, many entities related to the some of the traders were top net sellers in these scrips.

 

The regulator further said relationships have been established among some of the clients as per information available in its surveillance system, KYC details available with the stock exchanges, MCA databases and other publicly available sources.

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