sebi:190-210_191-192
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Facts / Headnote
Noticees restrained from buying, selling and dealing in or accessing the securities market for a period of two years; for Manna Glass Tech Industries Ltd. and Shri Ashok Navinchandra Chokshi the restraint runs concurrently with the earlier three-year restraint from February 01, 2006.
Provisions invoked
- s. 11B
Regulations
- Reg. 11
- Reg. 2(c)
- Reg. 3
Parties
- Manna Glass Tech Industries Ltd.
- Shri Jayesh Balmukundbhai Mehta
- Shri Ashok Navinchandra Chokshi
- Shri Dattatray Marutirao Sawant
Holding
The company and its three directors were held to have violated Regulations 3, 5(1)(a) & (b) and 6(a) of the PFUTP Regulations by publishing a misleading advertisement proposing a buy-back of shares at Rs. 10/- per share when shares traded at Rs. 1.25-1.50, and then withdrawing the proposal without any public announcement, thereby creating artificial demand and defrauding investors. The Noticees were restrained from accessing the securities market for a period of two years.
Full text
Page 2 of 11 matter revealed that shares of such companies were thinly traded. It may be mentioned that such advertisements were not required by law and the companies were voluntarily publishing them. As a result of this publication, there was unusual price volume movement in the shares of the companies around the time of the issuance of such advertisements. It appeared that the purpose of such advertisements was clearly aimed at attracting investors interest in illiquid scrips and to induce them to trade in such scrips. In view of these facts, SEBI conducted investigation in such matters including the issues arising out of advertisement issued by Manna Glass Tech Industries Ltd., a company listed at Bombay Stock Exchange Ltd. (BSE) and Ahmedabad Stock Exchange Ltd. (ASE).
Page 3 of 11 since inception, resigned between November 2001 to May 2002. 1.5 In the board meeting held on July 9, 2002, attended by all the directors, it was resolved that “to accommodate expansion plan of the company by planning back the accumulated profit into the business of the company, the proposed buy-back plan of equity shares is hereby cancelled”. However, no public announcement or advertisements were made to the effect that the proposal was rejected. During the period from issuing the advertisement for proposal for buy-back till the time of withdrawal of buy back proposal, it was observed that volume and price of scrip suddenly shot up. The entire chain of events pointed out a clear involvement on the part of directors to create an artificial demand for the shares of the company and to cheat the innocent investors. Thus, Manna Glass Tech Industries Ltd. and its directors namely Shri Jayesh Balmukundbhai Mehta, Shri Ashok Navinchandra Chokshi and Shri Dattatray Marutirao Sawant (hereinafter referred to as “Noticees”) were alleged to have violated the provisions of Regulation 3, 5(1)(a) &(b) and 6(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 (hereinafter referred to as “PFUTP Regulations”) for issuing misleading statements / advertisements, designed to defraud and influence the investment decisions of the investors.
Page 4 of 11 directors mentioned in the notice are presently employees of the company. But it was noticed that he had explained the reasons for the advertisement before the investigating officer and as such his submission after the show cause notice is contradictory in nature.
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Source: SecMarx — sebi:190-210_191-192. 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.