sebi:MO/25/IVD/12/03
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Directions prohibiting KIL from dealing in securities (order to come into force with immediate effect)
Provisions invoked
- s. 11B
- s. 19
- s. 11(3)
Regulations
- Reg. 11
- Reg. 4
- Reg. 4(a)
Parties
- Kosha Investments Ltd. (KIL)
Holding
KIL was found to have engaged in manipulative trading in the scrip of the company, creating artificial volumes and price movement, in violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995, and directions prohibiting it from dealing in securities were issued with immediate effect.
Full text
3 From an average daily volume of 12,521 shares during the period from March to May 1999, the volumes started rising and were in the range of 60,000 - 65,000 shares per day till August 1999. The movement of the scrip (in terms of the price) was more or less in tandem with NSE.
client to various brokers/sub brokers at the same point of time and that it was their trading which was responsible for the abnormal price movement. From the trading details submitted by the exchanges, it further appeared that KIL had employed manipulative tactics, either to maintain the scrip price and/or to increase the price drastically, and also create artificial volumes by continuously funding the same. It was found that there were major fund transfers from the account of the company to the account of KIL and from the books of KIL to the accounts of the brokers/sub brokers, which was found to be not mere loan transactions/ICD’s, but a process whereby KIL received the funds from the company, which were then utilised by it to meet its settlement obligations with various brokers/sub brokers (towards the shares of the company that were purchased by it). It thus appeared that KIL was apparently used as a “front entity” by the management circles of the company which was interested in jacking up the price of the scrip.
invest and to hold, sell and deal with shares, stocks and bonds etc., carry on the business of the investment company and buy underwrite, sub-underwrite, invest in and acquire and hold shares, stocks, etc. By virtue of its authority to carry on financial investment related business and acquire shares of the companies, it had, since its incorporation, various financial dealings with and/or acquired shares, in the capital of a host of listed and unlisted companies. Furthermore, on an average, more than 60% of its income comprised of dividend earnings from shares held by it. KIL submitted that in or about 1988, it had acquired shares held by one of the original promoters of the company i.e. Killick Industries Ltd. and had became promoter of the company and over a period of time, bought and sold shares in the capital of various companies including in that of the company, during the normal course of its business. KIL further stated that at times when the company and/or the group companies associated with the group were in need of funds, upon request, it arranged for the said funds, either by way of a term loan, bridge loan / ICD etc. or in the alternative, furnished a collateral security in respect of such borrowings. It has stated that at times, KIL arranged for funds from a third party including banks, financial institutions or furnished a collateral security to the lender and sometimes, various persons made funds available to KIL and/or the company against the collateral securi
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Source: SecMarx — sebi:MO/25/IVD/12/03. 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.