sebi:10350

SEBI · SEBI · 2005-03-17 · G Anantharaman, Whole-Time Member

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Facts / Headnote

Interim order directing eleven stock brokers not to buy, sell or deal in securities pending inquiry, and suspending trading in six listed companies until further directions; objections and personal hearing opportunity given within 15 days.

Provisions invoked

Regulations

Parties

Holding

SEBI's Whole-Time Member directed eleven CSE stock brokers to refrain from buying, selling or dealing in securities pending inquiry, and suspended trading in six listed companies whose shares had witnessed sharp artificial price rises. The order was passed to protect the interests of investors and the integrity of the securities market pending formal investigation.

Full text

BANKAM INVESTMENTS LTD., (5) S. T. SERVICES LTD. AND (6) AMLUCKIE INVESTMENT CO. LTD. 1. Background 1.1 Trading and sharp rise in a short period in shares of companies with low market capitalization, commonly referred to as “small cap stocks” or “penny stocks” in the recent times have been engaging the attention of SEBI, the stock exchanges and the media. They have been under the surveillance of SEBI and the stock exchanges for some time. The following six companies are examples of such “small cap” companies, whose shares witnessed a sharp price variation ranging from 200% to 1900% within a short period between March 2005 to September 2005 on the Calcutta Stock Exchange (CSE):

1 Prime Capital Market Ltd. 17/3/05 to 15/9/05 14.00 280.40 1903 5 months 28 days 2 Subh Laxmi Projects Ltd. 17/3/05 to 14/7/05 21.30 248.50 1067 3 months 27 days 3 Global Capital Market Ltd. 17/6/05 to 16/9/05 1.25 13.50 980 3 months 4 Bankam Investments Ltd. 9/6/05 to 6/9/05 2.10 16.85 702 3 months 7 days 5 S. T. Services Ltd. 18/3/05 to 16/9/05 12.10 96.50 698 5 months 28 days 6 Amluckie Investment Co. 1/4/05 to 23/8/05 95.00 298.50 214 4 months 22 days The steep increase in price of the above companies’ shares warranted an immediate examination of the dealings in the share, which was accordingly undertaken by SEBI. The major

The company filed its financial results with the CSE also upto the period March 2003 only. It is observed from the financial statements filed by the company with the CSE for the years ended March 2002 and March 2003 that the company had no sales during the above period and had incurred net losses of Rs.4 lakh and Rs.6 lakh respectively indicating negative performance. The foregoing coupled with the fact that the company has not bothered to file any financial statements for the year ended March 2004 and March 2005 only confirms the belief that the company has scant interest in disclosing its financial results to the investors. In the absence of any details about the financial performance of the company to the investors in the past two years, the astronomical rise in the price of 1903% during March 17, 2005 to September 15, 2005 can only be artficial. An

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Source: SecMarx — sebi:10350. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.