sebi:BS/AO-59/2008
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Facts / Headnote
Penalty of Rs. 1,00,00,000 imposed on Shri Dhaval A. Mehta for violation of Section 12A of the SEBI Act, 1992 and Regulations 3 and 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
Provisions invoked
- s. 15
- s. 12A
- s. 12
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4
- Reg. 200
- Reg. 3(a)
Parties
- Shri Dhaval A. Mehta
Holding
The noticee was found to have violated Section 12A(a) and 12A(b) of the SEBI Act, 1992 and Regulations 3 and 4 of the SEBI PFUTP Regulations, 2003 by cornering shares reserved for retail investors in the IPOs of IDFC and Suzlon Energy Limited through fictitious/benami demat accounts and subsequent off-market transfers to financiers. A penalty of Rs. One Crore was imposed under Section 15HA of the SEBI Act, 1992.
Full text
2 5. Gateway Dispriparks Ltd. 6. Gokaldas Export 7. ILFS Investmart 8. Indraprasth Gas 9. Infrastructure Development Finance Co. Ltd.
3 Operators. It is alleged that these Key Operators subsequently transferred the shares through off market deals to ultimate beneficiaries (hereinafter referred to as the ‘financiers’) who are alleged to have financed the whole process. In this regard, it is alleged that the said practice was adopted to corner the quota for retail investors in the IPOs of the companies.
4 7. A Show Cause Notice (hereinafter referred to as ‘SCN’) A&E/BS/68771/2006 dated June 07, 2006 was issued to the noticee in terms of the provisions of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing penalties by Adjudicating Officers) Rules, 1995 (hereinafter referred to as ‘the Rules’), requiring the noticee to show cause as to why an inquiry should not be held for the violations alleged to have been committed by him. The noticee replied to the SCN vide letter dated July 8, 2006, seeking extension of time for replying to the SCN. Subsequently, the noticee vide letter dated September 19, 2006 requested for the details regarding the specific transactions resulting in the violations alleged to have been committed by him. The reply also stated that the term ‘Key Operator’ had not been explained in the SCN, nor the names of the IPOs in which the noticee had allegedly corned shares specifically mentioned. The reply also stated that the names of the persons from whom the noticee received shares and the quantity had not been identified in the SCN.
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Source: SecMarx — sebi:BS/AO-59/2008. 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.