sebi:EAD-5/SVKM/DS/AO/47/2015-16

SEBI · SEBI · 2013-07-22 · S V Krishnamohan, Chief General Manager & Adjudicating Officer

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

Facts / Headnote

Violation established; penalty of Rs. 2,00,00,000 imposed under Section 15A(b) of SEBI Act, 1992

Provisions invoked

• s. 41(3)
• s. 15A
• s. 15
• s. 16
• s. 15I
• s. 15J
• s. 15H
• s. 15F
• s. 25
• s. 17
• s. 10
• s. 152A
• s. 11
• s. 22(1)

Regulations

• Reg. 13
• Reg. 13(3)
• Reg. 13(6)
• Reg. 13(5)
• Reg. 58

Parties

• Sunciti Financial Services Pvt. Ltd.

Holding

Noticee, a promoter holding more than 5% in Maharashtra Polybutenes Ltd., violated Regulation 13(3) read with Regulation 13(5) of PIT Regulations, 1992 by failing to disclose two changes exceeding 2% on February 17, 2009 and August 17, 2009. Penalty of Rs. 2,00,00,000 was imposed under Section 15A(b) of SEBI Act, 1992.

Full text

Adjudication Order in respect of Sunciti Financial Services Pvt. Ltd. in the matter of Maharashtra Polybutenes Ltd. Page 2 of 15 had incurred losses till the financial year 2006-07 and made a meagre profit of ` 2.87 crore and `2.91 crore for the financial years 2007-08 and 2008-09 respectively. MPL shares were infrequently traded earlier but during the relevant period a total of 53,51,932 shares were traded and the price increased from` 53.35 to ` 79.95,an increase of 49.85% in a span of 5 months without there being any change in the economic fundamentals of the company.

Adjudication Order in respect of Sunciti Financial Services Pvt. Ltd. in the matter of Maharashtra Polybutenes Ltd. Page 3 of 15 in the SCN. Vide notice dated January 02, 2015, an opportunity of personal hearing was also granted to the Noticee on January 28, 2015. The Authorized Representative of the Noticeeappeared and sought time for filing reply to the SCN. Noticee did not submit any reply to the SCN. Vide notice dated March 09, 2015, another opportunity of hearing was scheduled on March 25, 2015. Vide letter dated March 11, 2015, Noticee filed its reply to the SCN. On March 25, 2015, the Authorized Representative of the Noticee appeared for the personal hearing and sought time for filing additional submissions. Further, subsequent to the transfer of erstwhile Adjudicating Officer, another opportunity of hearing was also provided to the Noticee on June 29, 2015 vide notice dated June 22, 2015. The Noticee requested for rescheduling the hearing. Accordingly, the hearing was rescheduled to July 06, 2015. The Authorized Representative of the Noticee appeared for the hearing andreiterated the submissions made vide letter dated March 11, 2015. In the hearing dated July 06, 2015,Noticee submitted the following: a) With regard to the charge of non-disclosure of change in shareholding pattern it was admitted that the disclosure was incomplete in terms of the prescribed Regulations to the company. However, it was contended that disclosure to the Stock Exchange was made and supporti

Adjudication Order in respect of Sunciti Financial Services Pvt. Ltd. in the matter of Maharashtra Polybutenes Ltd. Page 4 of 15  It was agreed and understood between the financiers and the promoters that transfer of shares for raising loans is merely a transaction of pledge by way of transfer and such transfer of shares will not be treated as sale of shares.  Sunciti pledged by way of transfer of equity shares of MPL held by it, ten lakh each, in favour of Sikhar Merchandise Private Limited and Aryavart Overseas Private ltd. Sunciti was liable to inform MPL about such transactions.  In point no. 6 of the SCN, it has been alleged that the Company had not disclosed the change in the shareholding pattern to MPL. The fact is that the company has informed MPL in Form D. The submission of Form D with MPL and/or BSE Ltd. was inadvertent, unintentional, minor and venial wrong reporting under Regulation 13(6) of the PIT Regulations, 1992. Most of the information required in Form C has been reported in Form D. An omission of reporting of PAN number of a promoter can hardly affect an investor‟s ability to take an informed decision particularly when most of the information required in Form D and Form C are common and have been reported by the company and/ or to the stock exchange.  In the entire transaction made during the investigation period there are no complaints of investors, there are no aggrieved parties, there is no alleged profit or gain made out of such transaction, there

Source: SecMarx — sebi:EAD-5/SVKM/DS/AO/47/2015-16. 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.