sebi:MO/41/IVD/12/03

SEBI · SEBI · 2003-04-16 · A.K. Batra, Whole Time Member

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Facts / Headnote

Noticee found guilty and prohibited from buying, selling or dealing in securities directly or indirectly for a period of two years with immediate effect

Provisions invoked

• s. 11(4)
• s. 19

Regulations

• Reg. 11
• Reg. 3

Parties

• NewAge Finsec Pvt. Ltd.

Holding

Newage indulged in creation of false market in the scrip of VWL and hindered true price discovery in violation of Regulations 3, 4(a), 4(b), 4(c) and 4(d) of the 1995 FUTP Regulations, and was prohibited from dealing in securities for two years.

Full text

2 Ashok Agarwal, promoter of SRG group of companies, to the office of SEBI, in connection with the investigations in the scrip of Vatsa Music Ltd. Thus, VWL is connected to SRG group and Newage is connected to VWL. 2.0 Pursuant to the investigation, a show cause notice dated April 16, 2003 was issued to Newage alleging it to have indulged in creation of false market in the scrip and hindered true price discovery thereby violated Regulations 3, 4(a), 4(b), 4(c) and 4(d) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995. No reply was received from Newage. Thereafter, a communication granting it an opportunity of hearing before SEBI on June 12, 2003 was sent vide letter dated May 30, 2003. In reply to the same, Newage sent a letter to SEBI dated 23rd May, 2003, which was received by SEBI on June 3, 2003 wherein some clerical mistakes in the show cause was pointed out by them. 2.1 A further show cause notice was issued to Newage vide letter dated June 6, 2003. Shri Sanjeev Mahajan, director of Newage replied to the show cause notice vide letter dated July8, 2003. He stated as follows: ? he was a director in Newage ? Mr. Sandeep Bansal was not a director in the company since a long time and hence he had nothing to do with the company or with the activities of the company. ? The reasoning that since Mr. Sandeep Bansal was one of the subscribers to the Memorandum of Association of the comp

3 it was VWL or Satyam or Infosys. Such transactions were done by Shri Bhandari as per the news available in the market. ? Denied the linkage between VWL and SRG and requested SEBI to drop the proceedings against them. 2.2 Thereafter, Newage was granted an opportunity of hearing before me on July 28, 2003, which was communicated vide letter dated July 15, 2003. The hearing was adjourned to August 6, 2003 and the same was communicated vide SEBI’s letter dated July 21, 2003. No one appeared for Newage in the said hearing. However, a letter dated August 02, 2003 was received from Newage, seeking adjournment on the ground that travel reservation was not confirmed for its representative to appear for the hearing. I find that the same is not a substantive and justifiable ground for adjournment as the date of hearing was communicated to Newage well in advance. Therefore, I proceed to pass this order after considering the reply furnished by Newage to the show cause notice. 3.0 I have examined the findings of investigation which inter alia contains the trading details of Newage, also incorporated in the Show Cause Notice issued to it, together with it’s reply to the said show cause notice. 3.1 VWL was incorporated as a private limited company in the name and style of Ongoing Advertising and Packaging Pvt. Ltd. It was converted into a public limited company on February 20, 1996. On June 24, 1996, the name of the company was changed to Vatsa World Limited. On June 19, 2001, the name of

4 Date Opening Price Closing Price High Price Low Price Traded Quantity 09-04-01 12.50 12.50 12.50 12.50 500 10-04-01 9.50 9.50 9.50 9.50 300 12-04-01 9.55 9.55 9.55 9.55 200 25-04-01 8.00 8.00 8.00 8.00 100 27-04-01 7.00 7.00 7.00 7.00 100 30-04-01 6.50 6.50 6.50 6.50 200 03-05-01 5.00 5.00 5.00 5.00 200 23-05-01 6.50 6.50 6.50 6.50 500 24-05-01 8.00 8.00 8.00 8.00 500 25-05-01 10.00 10.00 10.00 10.00 500 28-05-01 10.25 11.15 11.15 10.25 800 29-05-01 11.00 11.00 11.00 11.00 200 30-05-01 12.00 12.00 12.00 12.00 200 31-05-01 13.00 13.00 13.00 13.00 200 01-06-01 12.00 13.00 13.00 12.00 500 05-06-01 11.15 11.15 11.15 11.15 500 06-06-01 9.90 10.50 10.50 9.90 1500 08-06-01 10.25 11.00 11.00 10.25 1000 20-06-01 13.75 13.75 13.75 13.75 900 21-06-01 17.15 17.15 17.15 17.15 500 22-06-01 19.25 19.25 19.25 19.25 1300 25-06-01 21.50 21.65 21.65 21.50 1100 26-06-01 23.35 23.35 23.35 23.00 1200 27-06-01 25.20 25.20 25.20 25.20 2000 28-06-01 27.05 27.20 27.20 27.05 1300 29-06-01 29.00 28.95 29.00 28.95 4800 02-07-01 30.35 31.25 31.25 30.35 700 04-07-01 30.25 33.50 33.50 30.25 1800

Source: SecMarx — sebi:MO/41/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.