sebi:Order/KS/AE/2021-22/11326
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Facts / Headnote
Adjudication Proceedings initiated vide Show Cause Notice dated February 28, 2011 disposed of without imposition of any monetary penalty
Provisions invoked
- s. 15
- s. 19
- s. 15H
- s. 15I
- s. 15J
Regulations
- Reg. 3
Parties
- Rahul Hemendra Shah
Holding
The allegation that the Noticee cornered shares meant for retail applicants in the Sita Shree Food Products Ltd IPO and thereby violated Regulation 3 of the PFUTP Regulations was not established. The adjudication proceedings were disposed of without imposition of any monetary penalty.
Full text
Page 2 of 20 received 16,590 shares on April 8, 2008 from 22 entities. All the 22 entities applied in the retail category and got allotment of 754/755 shares each in the IPO. It was observed that the shares received by the above entities were transferred to the Noticee on April 8, 2008 i. e. on the next day of listing and sold by the Noticee on the day of listing itself i.e. on April 7, 2008 when not in possession of the shares and the said shares were received on April 08, 2008 and accordingly delivered. It was alleged that all 22 entities only lent their names and the shares were received by the Noticee, thus the Noticee made unfair gains by abusing the fresh issue allotment process and cornering the shares meant for the retail applicants. In view of the same, the Noticee was alleged to have violated the provisions of Regulation 3 of the PFUTP Regulations.
Page 3 of 20 6. The Noticee acknowledged the hearing notice granting him an opportunity of personal hearing before the erstwhile AO on March 21, 2012. Further, the Noticee inter alia requested for copies of various documents relied upon in the matter and referred to in the SCN. Further, the Noticee requested for time to file reply and opportunity of hearing after the requested documents are provided to him. Reply dated September 29, 2012
Page 4 of 20 arranged the funds out of our surplus family funds and advanced the same to such 22 entities each Rs. 96,000/- to subscribe 3,200 shares each of Rs. 10/- with premium of Rs. 20/- aggregating Rs. 30/- as the IPO price in IPO of Sita Shree Food Products Ltd around 14.03.2008 on their specific request in that regard and against procuring Promissory Notes. The copy of Promissory Note is annexed to the submission. v. On 29.03.2008, against the application of 3200 shares, 755 shares were got credited in his Demat A/c as well as 754 / 755 shares got credited in the Demat account of rest of the 22 borrower entities. The Investigating Authority himself has found each applicant and corresponding applications as genuine. vi. Out of 22 entities, 16 entities were not having trading account, 2 entities included his mother and sister, and remaining 4 entities have preferred to sell in off market towards their repayment in usual course. vii. On 07.04.2008, being the listing day, on the instruction of the allottees and the borrowers, he had placed 15 sell orders and sold 17,345 shares of Sita Shree Food Products Ltd @ 43.95 through his broker Active Finstock Pvt. Ltd. The Net sale consideration @ Rs. 43.73 aggregating Rs. 7,58,507/- was received on 16.04.2008. viii. On 07.04.2008, as the shares were sold on the instruction of the respective borrower, he had purchased 16,590 shares of Sita Shree Food Products Ltd on Spot Basis @ Rs. 43.50 from each of the IPO borrower in an Off ma
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Source: SecMarx — sebi:Order/KS/AE/2021-22/11326. 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.