sebi:EAD-2/DSR/RG/203/2014
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Facts / Headnote
Penalty imposed on the Noticee for fraudulent and unfair trade practices
Provisions invoked
- s. 15
- s. 15H
- s. 15J
- s. 12A
- s. 11a
Regulations
- Reg. 3
- Reg. 12(a)
Parties
- Mercury Fund Management Company Limited
Holding
The Noticee, Mercury Fund Management Company Limited, was held to have violated Section 12A(a), (b) and (c) of the SEBI Act read with Regulation 3 of the PFUTP Regulations by facilitating Mr. Vinod Baid in offloading shares of GLL in the market through false positive corporate announcements, and a penalty of Rs. 50,00,000 was imposed under Section 15HA of the SEBI Act.
Full text
Page 2 of 10 company had only implemented the corporate announcement with regard to the preferential allotment of shares and warrants to Silver Golden Property Develop Fin Investment Ltd. and Carwin Mercantiles (P) Ltd., whereas, the remaining corporate announcements were not implemented and therefore, were false positive corporate announcements. On July 04, 2007 i.e. just before the corporate announcement with respect to the investment proposal of one Mr. Arun Jain, Chairman of Innevesco Pvt. Ltd, Mercury Fund Management Company Limited (hereinafter referred to as the Noticee/MFMCL), erstwhile promoter of GLL, had received 9,60,000 shares of GLL from the promoter of GLL viz. Mr. Vinod Baid in off market transaction. Further, out of the said shares so received, the Noticee had sold 9,30,850 shares during the period July 05, 2007 to August 22, 2007 during which the price of scrip had increased from ` 24.10 to ` 26.55. It was, therefore, alleged that the promoter had transferred the shares in off market to the Noticee and the Noticee in turn sold the said shares in the market taking advantage of the positive announcement made by GLL which were never implemented. It was also observed that the company had not informed the stock exchanges about subsequent implementation status.
Page 3 of 10 NOTICE, REPLY AND PERSONAL HEARING 6. The Noticee was issued a Show Cause Notice dated March 07, 2014 (hereinafter referred to as “SCN”) under Rule 4(1) of the said Rules to show cause as to why an inquiry should not be held and why penalty be not imposed on it for the aforesaid violations. Vide letter dated March 26, 2014, the Noticee acknowledged the receipt of the said SCN and requested four weeks' time to file its reply in the matter. However, no reply was received from the Noticee. Thereafter, in the interest of natural justice and in order to conduct an inquiry as per Rule 4(3) of the said Rules, an opportunity of personal hearing was granted to the Noticee on July 08, 2014 vide notice of hearing dated June 23, 2014. However, again vide letter dated July 05, 2014, the Noticee while acknowledging the receipt of the said hearing notice, requested for further four weeks' time to file its reply in the matter. As no reply was received from the Noticee, another opportunity of personal hearing was granted to it on August 25, 2014 vide notice dated August 05,
Page 4 of 10 (b) Do the violations, if any, on the part of the Noticee attract any penalty under Section 15HA of the SEBI Act ?
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Source: SecMarx — sebi:EAD-2/DSR/RG/203/2014. 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.