sebi:1294377175788

SEBI · SEBI · 2002-07-30 · G.N. Bajpai, Chairman, Securities and Exchange Board of India

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Facts / Headnote

Classic Credit Ltd., Panther Fincap and Saimangal found guilty of violating Regulation 4(a) of SEBI (PFUTP) Regulations, 1995; broking firms (NH Securities, Classic Share and Stock Broking Services, Triumph Securities) proceeded separately under SEBI (Procedure for Holding Enquiry and Imposing Penalties) Regulations, 2002

Provisions invoked

Regulations

Parties

Holding

Entities connected to and controlled by Ketan Parekh (Classic Credit, Panther Fincap, Saimangal) were found guilty of violating Regulation 4(a) of the SEBI (PFUTP) Regulations, 1995 for manipulating prices and creating artificial volumes in the scrip of Lupin Laboratories Ltd. during September-December 1999. Broking firms found to have committed violations (NH Securities, Classic Share and Stock Broking Services, Triumph Securities) were directed to be proceeded against separately under the SEBI (Procedure for Holding Enquiry and Imposing Penalties) Regulations, 2002.

Full text

2 Classic, Luminant and Panther or by other entities connected/controlled by Ketan V Parekh/Kartik Parekh., i.e., Saimangal Investrade Ltd [hereinafter referred to as ‘Saimangal’], NH Securities Ltd (on its proprietary account), Classic Shares and Stock Brokers Ltd (proprietary account), Chitrakut Computers Private Ltd [hereinafter referred to as ‘Chitrakut’], Classic Infin Ltd. [hereinafter referred to as ‘Classic Infin’], and Panther Investrade Ltd through other brokers. Classic, Luminant, Panther, Saimangal, NH Securities Ltd, Classic Shares and Stock Brokers Ltd, Chitrakut, Classic Infin, and Panther Investrade Ltd were found to be either connected or controlled by Ketan Parekh and hereinafter are collectively referred to as ‘KP Entities.’

3 2.0 Although none of the entities replied to the show cause notice despite several reminders, Shri Ketan V Parekh is found to have replied to the Ist show cause notice. He is stated to be replying in two parts. However, the second part has not come forth. In the reply(Part I) dated 16th December, 2001, he stated that the analysis of price movement has been done on wrong premises by SEBI.

4 Written Submissions by the entities covered in first show cause notice 3.2 Written submissions were forwarded by the entities covered by the first show cause notice during July 2003. In the written submissions submitted by Shri Ketan Parekh vide his letter dated July 2003, it was submitted that during the period of investigation he was a director on the Board of Classic, Panther, and Saimangal. He also stated that he had not acquired any shares in the scrip of Lupin Laboratories Ltd. and the transactions were carried out by investment companies, on whose Board he was a director. He also stated that there was no necessity for the prices of shares of all the companies in any one industry to be moving to the same extent as other scrips in such industry or sector. Also, he stated that abnormality in the price rise cannot be determined merely on comparison of price movements between select stocks in a particular industry. It was also his contention that mere association, as had been admitted by him during investigation, with the broking entities was insufficient to make him responsible for all the alleged actions of those companies, as figured in the show cause notice. He also denied any artificial price rise in the scrip during the period under consideration. It was submitted by him that although he had not placed any order, placing large orders in the market is not per se illegal.

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