sebi:IVD-ID9/RDB/AO/DRK-AKS/EAD3-460-462/3-5/2014

SEBI · SEBI · 2013-05-11 · D. Ravi Kumar, Chief General Manager & Adjudicating Officer

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Facts / Headnote

Penalty imposed jointly and severally on all three noticees under Section 15HA of the SEBI Act for violation of Sections 12A(a), (b), (c) of the SEBI Act read with Regulations 3(a), (b), (c), (d), 4(1), 4(2)(a), (d), (e) of PFUTP Regulations, 2003.

Provisions invoked

• s. 15
• s. 15H
• s. 15J

Regulations

• Reg. 3

Parties

• Shreyanshnath Shares and Financial Services Pvt. Ltd.
• Shri Patel Kirtikumar Gopalbhai
• Shri Chauhan Vijaykumar Babubhai

Holding

The Adjudicating Officer held that noticee 1 violated Sections 12A(a), (b), (c) of the SEBI Act read with Regulations 3(a)-(d) and 4(1), 4(2)(a), (d), (e) of the PFUTP Regulations by routing IPO proceeds through interconnected entities to fund its stock broker payments, and that noticees 2 and 3, as directors of noticee 1, are responsible for its actions. A penalty of ₹1 Crore was imposed jointly and severally on all three noticees under Section 15HA.

Full text

Page 2 of 10 APPOINTMENT OF ADJUDICATING OFFICER 2. I was appointed as the Adjudicating Officer under Section 15 I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’), read with Rule 3 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as ‘Adjudication Rules’) to inquire into and adjudge under Sections 15 HA and 15 HB of the SEBI Act the violations of Sections 12A (a), (b) and (c) of the SEBI Act read with Regulations 3 (a), (b), (c), (d), 4 (1), 4 (2) (a), (d) and (e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’) alleged to have been committed by Shreyanshnath Shares and Financial Services Pvt. Ltd. (hereinafter referred to as ‘noticee 1’), Shri Patel Kirtikumar Gopalbhai (hereinafter referred to as ‘noticee 2’) and Shri Chauhan Vijaykumar Babubhai (hereinafter referred to as ‘noticee 3’), Directors of noticee 1 and the same was communicated vide proceedings of the Whole Time Member appointing Adjudicating Officer dated 11.05.2013.

Page 3 of 10 4. Vide personal hearing notices dated 23.08.2013, the noticees were granted an opportunity of hearing on 20.09.2013 at 11:00 am at SEBI Western Regional Office II, Ahmedabad. The said notices were served on the noticees and proof of service is on record. Further the noticees were advised to submit their reply to the SCN on or before 13.09.2013. However the noticees failed to attend the scheduled hearing without providing any reasons. A final opportunity of hearing was granted to the noticees vide hearing notices dated 23.09.2013 to attend the hearing on 18.10.2013 at 03:00 pm at SEBI Bhavan, Mumbai. In the said notices it was mentioned that if the noticees fail to attend the hearing the matter shall be proceeded based on the material made available on record. Proofs of service of the notices on noticees 2 and 3 are on record. It is observed that noticee 1 has the same address as the other 2 noticees. The noticees again failed to attend the scheduled hearing without providing any reasons.

Page 4 of 10 tune of 3,50,09,187 shares which got traded through 2,04,524 trades. Thus, the number of shares traded on the first day of listing represents 1.98 times of the paid up capital of the company. Out of 3.50 Crore shares traded on the listing day only, 40,17,005 shares were the net delivered quantity. Thus, the delivery to trade percentage was just 11.48%. Further the deliverable quantity of 40,17,005 shares out of the 45 Lakh shares issued through IPO represents 89.27%. Thus, a large portion of the allottees of RDB IPO had sold their shares on the day of listing.

Source: SecMarx — sebi:IVD-ID9/RDB/AO/DRK-AKS/EAD3-460-462/3-5/2014. 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.