sebi:MO/61/IVD/08/04

SEBI · SEBI · 1995-10-06 · A K Batra, Whole Time Member

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

Facts / Headnote

Certificate of registration of M/s Neon Vinimay Pvt Ltd, member NSE, INB230910030, suspended for a period of one month, effective on expiry of three weeks from the date of the order.

Provisions invoked

• s. 11B
• s. 20
• s. 20t

Regulations

• Reg. 7
• Reg. 11
• Reg. 4
• Reg. 4(b)
• Reg. 10

Parties

• M/s Neon Vinimay Pvt Ltd

Holding

Neon Vinimay Pvt Ltd was held to have entered into non-genuine transactions in Subhash Projects and Marketing Ltd during April 3, 2002 to June 14, 2002 in violation of Regulation 4(b) and the Stock Broker Code of Conduct, and its registration was suspended for one month; no misdeed was found against it in relation to the 1995 rights issue of SPML.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ 3.                  SPML came out with two simultaneous (but not linked) rights issues of :                                 i.            36,52,612 equity shares of Rs.10/- each at a premium of Rs.190/- per share, aggregating Rs.73,05,22,400/- (Rs.50/- payable on ap aggregate amount payable on application being Rs.18,26,30,600), and                              ii.            24,35,074 17% secured non-convertible redeemable debentures of Rs.150/- each for cash at par with a detachable warran Rs.36,52,61,100/- (Rs.20/- payable on application, aggregate amount payable on application being Rs.4,87,01,480). The rights issues opened for subscription on October 6, 1995 and closed on November 6, 1995. The issue was lead managed by M/s H Finance Corporation Ltd. and Canara Bank, Merchant Banking Division (hereinafter referred to as ‘HFCL’ and ‘Canbank’ respectively).

8.   In the meantime, investigations were conducted by the NSE for a different period i.e. April 3, 2002 to June 14, 2002 (Sett. No. 220206 2202114N) in the matter of the  trading in the scrip of SPML. It was alleged that the price of the scrip of SPML had fallen from Rs.45/- to a Rs.20/- during the period April 10, 2002 to May 27, 2002 and that Neon had acted as a broker and entered into transactions on behalf of tw associate companies namely 20th Century Engineering Ltd and SPML India Ltd, in the scrip of other associate company viz. SPML an entered into cross deals for the said clients, even though it was aware that both were associate companies and also associate compan SPML. It was noted that that Neon had dealt on behalf of the said two major clients (associated with SPML) and these trades accounted fo than 80% of the total gross quantity traded in the market during the entire period. It was seen that apart from some proprietary trading and t on behalf of the aforesaid two clients, some other clients viz. Suman Jain, Sarita Jain, Mayank Securities Pvt. Ltd had dealt through Neon shares of SPML

before issuing any show cause notice, it was stated that SEBI had issued a notice at the investigation stage and hence reference to the said Section 11B was premat Regulation 11 had been wrongly invoked in the absence of omission to comply with Regulation 10.

Source: SecMarx — sebi:MO/61/IVD/08/04. 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.