sebi:190-210_199

SEBI · SEBI · 2006-01-24 · G. Anantha, Whole Time Member (WTM)

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Restrictions imposed by interim order dated January 24, 2006 continued/modified; restrictions not applicable against Rational Finvest Pvt. Ltd.; restrictions on Shri Amrutlal Jivandas Gandhi apply excepting shares of Swan Mills Limited; depositories directed not to give effect to transfers of shares of companies listed in Table 1 in beneficial owner accounts of clients (with specified relaxation).

Provisions invoked

Regulations

Parties

Holding

SEBI found that Scimitar and Shri Sharad Rathi acted in concert to artificially inflate the price and volumes of DFTL shares, and that Galaxy Broking Limited's clients were interrelated and controlled by the Anil Gandhi group, warranting continuation of restrictions on trading and transfer of shares of penny stock companies.

Full text

Dec 21, 2006 | Orders : Orders of Chairman/Members WTM/GA SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 11(1), 11B AND 11(4) (b) OF SECURITIES AND EXCHANGE OF INDIA ACT, 1992 IN THE MATTER OF M/s. GALAXY BROKING LIMITED, MEMBER BSE (S REGISTRATION NO. INB010882739) AND OTHERS.

3.2 Scimitar also stated that it had been holding shares of DFTL prior to and subsequent to the investigation period and had traded not only in the shares of DFTL but also in other shares during the relevant period. They stated that their decision to trade in the shares of DFTL was based on their commercial wisdom and was not guided manipulative intent or design. 3.3 Scimitar submitted that the price of the scrip is based on host of other factors like global trends, future potential of the industry, demand and supply, performance of the e etc. including the profit of the company 3.4 Scimitar submitted that they had extended a total loan of Rs 1,01,89,000/- to Rathi for investing in the securities market without entering into any loan agreement and charging any interest on the loan as he was well known to Yash Birla Group of which they are a part and the said loan was extended to him on the above basis of relations 3.5 Scimitar denied that the trades done by Rathi in the scrip of DFTL were done on their behalf. They submitted that inadvertently there has been a lapse on their part as they h disclosed the increase in their share holding by 2.25% of the company on March 31, 2001 and the same was disclosed to the company DFTL immediately when they aware about the lapse and the same is evident from the disclosure made by DFTL for the quarter ending September 30, 2001 to BSE. 3.6 Scimitar denied that they were acting in concert with Rathi and therefore not required to disclose the

05/12/00 19.05 21.55 19.05 21.50 7.50 133 10000 7300 21.00 06/12/00 23.00 23.20 23.00 23.20 7.91 17 1850 11/12/00 27.85 27.85 27.85 27.85 7.95 20 3900 3800 27.95 12/12/00 30.05 30.05 30.05 30.05 7.90 31 8900 8900 30.15 13/12/00 32.00 32.40 32.00 32.40 7.82 37 7350 7350 32.49 14/12/00 34.70 34.95 34.70 34.95 7.87 39 5550 5550 35.04 19/12/00 31.55 36.80 31.50 36.80 7.92 143 13900 10750 35.81 20/12/00 39.70 39.70 35.65 39.70 7.88 119 15750 15400 39.47 28/12/00 37.00 37.35 32.25 37.35 7.95 75 6300 1050 36.50 29/12/00 39.00 40.30 35.50 40.20 7.63 246 16950 14100 39.81 15/01/01 42.20 42.25 40.75 42.25 7.92 175 16850 9300 42.06 15/01/01 500 40.88 16/01/01 42.50 45.60 42.50 45.60 7.93 131 25150 23950 45.67 6.5 It is observed from the above table that Scimitar has shown considerable interest in DFTL shares. It has transacted in the scrip in large quantities to manipulate the price by c substantial quantities of the floating stock of scrip which earlier had very low per day trading volumes. It had punched buy orders for large quantities at the circuit majority of the days on which the scrip had hit the upper circuit. These purchases were made at successively higher prices wherefrom it appears that the trading has be only with an intention to artificially raise the price and to create volumes in the market. Scimitar in its reply stated that the decision to execute the said trades was based commercial wisdom. However, Scimitar has not explained the reason to put large quantities of buy o

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Source: SecMarx — sebi:190-210_199. 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.