sebi:CO/210/ISD/03/2004

SEBI · SEBI · 1994-11-07 · G. N. Bajpai, Chairman, SEBI

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Facts / Headnote

Promoters and associate entities of Global Trust Bank held guilty of violating Regulation 4(a), (b), (c) and (d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995

Provisions invoked

• s. 11B
• s. 4(3)
• s. 11
• s. 44A

Regulations

• Reg. 4
• Reg. 11
• Reg. 4(d)
• Reg. 4(a)
• Reg. 2

Holding

The promoters and associate entities of Global Trust Bank were held guilty of violating Regulation 4(a), (b), (c) and (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995, for transferring a large chunk of shares to Ketan Parekh entities through structured and synchronized trades which resulted in artificial volume and facilitated price manipulation of the GTB scrip.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER Order under Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 read with Section 11 and 11B of SEBI Act, 1992. CO/210/ISD/03/2004 1.1.Global Trust Bank (GTB) was incorporated in 1993. Shri Ramesh Gelli, Smt Premkala Gelli, Shri Jayant Madhav, Shri Girish Gelli, Shri Niraj Gelli, Shri Sridhar Subasri, Smt Annapurna Sridhar are promoters of GTB (hereinafter called ‘the promoters’). Anjanaya Traders Pvt. Ltd., Chiranjeevi Traders Pvt. Ltd., Gajanan Financial Services Pvt. Ltd., Gajmukh Investments Pvt Ltd., Kadrish Finance & Investments Pvt. Ltd., Bombay Mahalakshmi Traders Pvt. Ltd are promoter’s associated entities (hereinafter referred as ‘the said associate entities’) . GTB came out with public issue in August 1994. The said promoters brought in 40% contribution and International Finance Corporation and Asian Development Bank are other major shareholders. The bank had technical and financial arrangement with the Hambrecht & Quist Group (H & Q), US, for technology transfer in capital-market related products (underwriting, placement, syndication, research etc.) and with TA Enterprise, Malaysia (TAE) for debt-related products and services like securitisation, financial derivatives, etc.

1.5.Foreign collaborators, namely H & Q as well as TAE held 71,50,000 and 62,50,000 equity shares of GTB respectively. The necessary RBI permission was obtained by GTB vide letter dated November 7, 1994 before allotment of shares to them. An MOU was signed by GTB with these collaborators which gave the promoter of GTB a first right of refusal if the foreign collaborators wanted to sell their shares of GTB. Later, it was observed that these two collaborators i.e. H&Q and TAE wanted to exit from the bank and consequently the promoter were offered these share. Promoters obtained permissions from the RBI for acquisition of these shares at the time of exiting of these foreign collaborators. On the basis of average price prevailing at the time of offer, M/s T A Enterprises sold 62,50,000 shares at the rate of Rs. 26.60 per share to the said promoters and the associate entities. Likewise, H & Q also sold 71.5 lacs shares to the said promoters and associate entities. Necessary intimation was also made to the exchange and SEBI as required under the SEBI (Substantial Acquisition of shares and Takeover) Regulations, 1997.

22-9-99 500000 1-10-99 500000 15-11-99 500000 1-12-99 500000 5-10-99 403550 2-12-99 321000 3-12-99 209680 In total about 44.3 lakh shares were sold through ALDAN.

Source: SecMarx — sebi:CO/210/ISD/03/2004. 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.