SEBI’s investigation of Empower Industries’ scrip following an unusual rise in price and volume during 16 February to 11 March 2005 revealed that the company had made misleading corporate announcements which led to a spurt in the volume and an increase in the price of the scrip
Mumbai: Capital market regulator Securities and Exchange Board of India (SEBI) has restrained Empower Industries India from dealing in the securities market for six months for resorting to fraudulent and unfair trade practices, reports PTI.
It said the company has facilitated its promoter-director and his related entities in carrying out transactions that led to a rise in the price and volume of the scrip and thereby acted as a fraud on gullible investors.
“Therefore, taking into consideration the facts and circumstances of the case... restrain Empower Industries India from accessing the securities market and prohibit it from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of six months,” SEBI said in an order on Friday.
SEBI conducted an investigation of the company’s scrip following an unusual rise in price and volume during 16 February to 11 March 2005.
It revealed that the company had made misleading corporate announcements which led to a spurt in the volume and an increase in the price of the scrip.
It was alleged that there was a concerted effort by the company and its promoter-director, Devang Master, to raise the price of the scrip, according to the SEBI order.
It was found that false corporate announcements were made about expansion plans. Besides, unaudited quarterly results showed profits of the company as significantly higher than what was subsequently reported in its audited results.
Large quantities of the shares of the company were traded on Bombay Stock Exchange (BSE) during the same time period, by certain entities that were found to be related to Mr Master, SEBI said, adding that the promoter-director off-loaded shares at significantly higher prices soon afterwards.
“... it was alleged that the announcements by the company were intended only to create investor interest in the scrip and thereby meant to mislead investors... it was alleged that the company projected a false picture to the investors about the performance of the company,” SEBI said.
The regulator had issued show cause notice to the company in September 2009 and studied the reply sent by it.
Refuting the company’s contention, SEBI said: “...during the time when the corporate announcements were made by the company certain clients were dealing in large quantities in the scrip. These entities had received/ transferred shares from/ to the promoter-director of the company, Devang Master, in off market transactions.”
SEBI said that in such a circumstance it is difficult to accept Empower Industries’ corporate announcements were of a bona fide nature.
“It cannot be a mere coincidence that the company made announcements of a board meeting to discuss issues that would ordinarily create interest in the scrip at the same time as related entities of the promoter-director were trading heavily in the scrip,” the order said.
As per investigation report and replies to SEBI’s show-cause notices issued in March, the regulator found that executive chairman Manoj Gaur and others had violated guidelines relating to insider trading by purchasing shares during the period when trading was closed
Mumbai: Capital market regulator Securities and Exchange Board of India (SEBI) has imposed penalty totalling Rs70 lakh on three senior executives of Jaiprakash Associates (JAL), including executive chairman Manoj Gaur, and their relatives for involvement in insider trading, reports PTI.
Besides Mr Gaur, his wife and brother, SEBI has named JAL senior vice president (corporate affairs) and company secretary Harish K Vaid and his Hindu Undivided Family (HUF), as well as the company’s whole-time director S D Nailwal.
SEBI conducted investigation into the trading in scrips of JAL during the period of 29 September to 27 October 2008.
As per investigation report and replies to SEBI’s show-cause notices issued in March, the regulator found that Mr Gaur and others had violated guidelines relating to insider trading by purchasing shares during the period when trading was closed.
The noticees were found to have bought shares of the company during the period when trading window was closed while they were in possession of the unpublished price sensitive information.
SEBI said the company received the trial balances for the quarter ended 30 September 2008 from its various units in the first week of October 2008.
It said the consolidated trial balance of JAL for the quarter ended 30 September 2008 was available on 12 October 2008 and the company’s board approved the consolidated quarterly results on 21 October 2008 as well as declared interim dividend of 15%.
It had also approved issuance of shares on rights basis.
“In view of the above, the period from 11 October 2008 to 21 October 2008 was considered as the period when the information about the financial results and interim dividend was unpublished price sensitive information,” SEBI order said.
Mr Gaur, his wife Urvashi Gaur and his brother Sameer Gaur have been fined Rs10 lakh each.
Similar fines have been imposed on Mr Vaid and his HUF, while Mr Nailwal has been handed a total fine of Rs20 lakh.
Jaiprakash Associates executive chairman Manoj Gaur said the findings in the SEBI order are “completely erroneous and contrary to factual position” and will challenge it in SAT.
“It is unfortunate that despite adequate representation to the adjudicating officer, frivolous inferences have been drawn. Aggrieved by the order, we are in the process of challenging the same before the Securities Appellate Tribunal,” Mr Gaur said in a late night statement.
He noted that findings in the order relate to purchase of “1,000 shares by my wife and 7,400 shares by my brother, between 13 to 16 October 2008 (which purchase was not done based on any insider information and the said shares were not even sold)”.
The Ambani brothers wield so much clout not just in business and political arena but on the markets, as well. Today, wild “rumours” were spread that the Ambani siblings—Mukesh and Anil—would be patching up and the markets shot up in what would be characterised as a dull trading session
No, we are not talking about the Reliance Power Company. We are talking about how much power the Ambani family has. Today, wild “rumours” were spread that Mukesh Ambani of Reliance Group and Anil Ambani of the ADAG Group would be patching up and the markets shot up in what would be characterised as a dull trading session. The Sensex was hovering around at 15,755 at around 2.26 pm, before the rumour machine kicked in and propelled it up to 15,978, a rise of over 220 points within a span of just 16 minutes! That is a whopping 1.42% upside move in a short timeframe. People close to the family who knew of the “rumour” beforehand would have pocketed a tidy sum of money, at the expense of the small investor who had no idea of this move.
What does this finding tell us? Simple. The Ambani brothers wield so much clout not just in business and political arena but on the markets, as well. For instance, Mukesh Ambani had bailed out the TV18 Group, cleaned up its debt-ridden balance sheet, and effectively taken control of the media conglomerate. In this case, the rumour would have only helped the Anil Ambani group whose stocks shot up 5-7%. Immediately, thereafter denial came and the market slumped back.
Will the Securities & Exchange Board of India (SEBI) check who traded the most before the rumour spread like wildfire? Rumour-mongering has been an old trick of the Ambanis and this episode shows, very little has changed.