sebi:AO/SBM/EAD-3/71-73/2017

SEBI · SEBI · 2016-05-17 · Suresh B Menon, Adjudicating Officer

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Facts / Headnote

Penalty imposed on all three Noticees for failure to make disclosures under Regulation 13(4A) read with 13(5) of PIT Regulations, 1992

Provisions invoked

• s. 15A
• s. 15
• s. 19
• s. 15J

Regulations

• Reg. 13
• Reg. 3(3)
• Reg. 13(5)
• Reg. 12

Parties

• Amee Tushar Shah
• Parag Patel
• Rajula Finance Ltd.

Holding

The Noticees, being promoters/promoter group members of ASL, failed to make disclosures in Form D to the company and stock exchanges within two working days of inter-se off-market transactions that exceeded the threshold under Regulation 13(4A) of the PIT Regulations, 1992, and are therefore liable for penalty under Section 15A(b) of the SEBI Act.

Full text

Page 2 of 14 for the quarter ended September 2011. Upon further examination, it was observed that Noticee no 1 had purchased 1,82,000 shares from 48 other promoters/promoter group entities of ASL during the examination period. It was further observed that, out of the 48 promoter group persons/ entities, Noticee no 2 and Noticee no 3 had sold 1,00,000 and 67,800 shares of the company respectively and these shares were purchased by Noticee no 1 by way of inter- se off-market transactions. In view of the above transactions among the promoters/promoter group of ASL during the examination period, it was observed that the Noticees had allegedly failed to make the necessary disclosures that were required to be made by them under the provisions of Regulation 13 (4 A) of SEBI (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as 'PIT Regulations'). Therefore, it was alleged that the Noticees have violated the provisions of Regulation 13 (4A) of the PIT Regulations.

Page 3 of 14 SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING: 5. A common Show Cause Notice Ref No. A&E/EAD-3/SBM-VB/18331/2016 dated June 29, 2016 (hereinafter referred to as “SCN”) was issued to the Noticees under the provisions of Rule 4 (1) of the Adjudication Rules, to show cause as to why an inquiry should not be held against the Noticees and why penalty, if any, should not be imposed on the Noticees under the provisions of section 15A(b) of the SEBI Act for their alleged violation of Regulation 13 (4A) of the PIT Regulations, as mentioned in the SCN. Briefly, the SCN dated June 29, 2016 contained the following observations/allegations: a) On the basis of an internal alert, Bombay Stock Exchange (BSE) conducted an examination into the activities in the scrip of the Company (now known as Safal Securities Ltd). BSE submitted its report to SEBI. Thereafter, SEBI conducted an examination in the scrip of the Company during the period from October 01, 2010 to April 29, 2011 (hereinafter referred to as ‘Examination Period’). It was observed during the examination that appropriate disclosures were not made by the Noticees in terms of Regulation 13 (4A) of the PIT Regulations, 1992, as regards their activity in the scrip of the company during the above referred examination period. The shareholding pattern/details of the Company for the quarter ended June and September 2011 are mentioned as under: Particulars Quarter ended June 2011 Quarter ended September 2011 No. of shareholders

Page 4 of 14 that the number of persons/ entities in the promoter group had reduced from 52 (as observed in in QE June 2011) to 4 (in QE Sept 2011). c) During the examination period, it was observed that there were inter-se transfer of shares of the company among the Noticees. It is alleged that Amee Tushar Shah who was holding 200 shares of the company, as on the quarter ended June 2011 had acquired 1,82,000 shares of the company from 48 other persons/entities belonging to the promoter group of the Company on September 28, 2011. It was alleged that Amee Tushar Shah, being one of the persons coming under the promoters/promoter group of the company had acquired shares of the company, which resulted in the change in the shareholding as mentioned under Regulation 13 (4A) of the PIT Regulations, 1992. The change in shareholding also required appropriate disclosures to be made by Amee Tushar Shah in the prescribed reporting format (Form D) to both Company and BSE in terms of the provisions of Regulation 13 (4A) of the PIT Regulations, 1992. It is alleged that Amee Tushar Shah had failed to make the necessary disclosures to the Company and BSE. It is therefore alleged that Amee Tushar Shah has violated the provisions of Regulation 13 (4A) of the PIT Regulations, 1992. d) It was further observed that, out of the 48 promoter group entities' who had sold the shares to Amee Tushar Shah, two persons / entities namely, Parag Patel and Rajula Finance Limited had sold 1,00,000 and 67,800 s

Source: SecMarx — sebi:AO/SBM/EAD-3/71-73/2017. 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.