sebi:Order/EAD-1/SBM/JR/2020-21/10693

SEBI · SEBI · 2016-07-04 · Suresh B Menon, 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

Adjudication proceedings initiated vide SCN dated December 20, 2016 disposed of as not maintainable and not proceeded with, with no penalty imposed

Provisions invoked

• s. 15
• s. 15H
• s. 15I
• s. 248
• s. 455
• s. 560

Regulations

• Reg. 4(1)
• Reg. 3(a)

Parties

• Amanat Suppliers Private Limited

Holding

The adjudication proceedings initiated against Amanat Suppliers Private Limited vide SCN dated December 20, 2016 are disposed of without adjudication on merits. The proceedings cannot be proceeded with because the Noticee's name was struck-off from the RoC list and dissolved as on June 29, 2018.

Full text

In the matter of Mystic Electronics Limited Page 2 of 8 Amanat Suppliers Private Limited (hereinafter referred to as “Noticee”) under the provisions of section 15 HA of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) for the alleged violation of regulations 3(a) (b), (c), (d) and regulation 4(1), 4(2)(a) and (e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”) by the Noticee. APPOINTMENT OF ADJUDICATING OFFICER

In the matter of Mystic Electronics Limited Page 3 of 8  It is alleged that a scheme was devised by MEL, the operators and the connected entities, including the Noticee by allotting shares on preferential allotment basis to various entities. It is alleged that the connected entities, including the Noticee increased the scrip price of MEL by placing the buy orders in the scrip at a price higher than the last traded price and also by absorbing the sell orders that were available in the market which were placed at a higher price than the Last Traded Price (LTP) in MEL. Once the scrip price of MEL reached the desired level, the preferential allottees exited and the preferential allottees have allegedly made a profit of Rs. 39 crore.  It is observed that MEL made a preferential allotment of 92,30,000 shares to 48 entities on June 7, 2013 to raise an amount of Rs. 56.06 crore and the shares were under lock-in for one year upto June 06, 2014. It is observed that the shares were allotted on preferential basis initially at Rs. 25 per share and subsequently, the same was revised to Rs. 60.74 (based on 26 week average price). Post lock-in period, it was observed that 14 allottees who were allotted shares in the preferential allotment have either fully or partly sold their holdings in MEL i.e. 86,71,828 shares were sold in patches (i.e these shares were sold after the stock split period and approximately 9.30% of the shares allotted through the preferential allotment were sold by the p

In the matter of Mystic Electronics Limited Page 4 of 8  From the LTP (Last traded price) analysis and Trade/order log placed at Annexure-H carried out during the period when the scrip price of MEL had witnessed sharp rise i.e the patch 1 of the investigation period, it is observed that the entities related to the company/ operators were the major contributors to the LTP in the Price Rise Patch and contributed substantially to the price rise of the scrip by entering into transactions at prices higher than the last traded price. By carrying out such trades repeatedly, the connected entities established price higher than the last traded price to increase the price of the scrip during the price rise patch.  It is alleged that the connected entities have contributed to the price rise of Rs. 1550.1 (net LTP) compared to the market Net LTP of Rs. 489.45. Further, it is observed that only 35 connected entities (of 60 entities) have contributed to positive LTP of Rs. 2777.80 which is 47% to market Positive LTP (Rs. 5875.95) in 2642 trades for a total volume of 11,44,294 shares. Further, the connected entities, bought 11.55 lac shares which is 40.79% of the market volume (price rise- Patch I) and contributed to 47% of market positive LTP.  It is observed that the Noticee is one of the top 10 connected entities who contributed to the Positive LTP. The details regarding the trades of the Noticee is as under: Client Name Operator Net LTP Positive LTP Negative LTP Zero LTP % of +ve LTP

Source: SecMarx — sebi:Order/EAD-1/SBM/JR/2020-21/10693. 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.