sebi:Order/PM/AN/2021-22/11782-11795

SEBI · SEBI · 2014-06-06 · Prasanta Mahapatra, Adjudicating Officer

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

Provisions invoked

• s. 15
• s. 15H
• s. 15J

Regulations

• Reg. 3
• Reg. 4
• Reg. 4(1)
• Reg. 3(a)

Parties

• Vishnudham Marketing Private Limited (Noticee 1)
• Noticee 2
• Noticee 3
• Noticee 4
• Noticee 5
• River High Right Share Brokers Private (Noticee 6)
• Noticee 7
• Noticee 8
• Noticee 9
• Noticee 10
• Noticee 11
• Noticee 12
• Noticee 13
• Noticee 14

Holding

The Adjudicating Officer rejected the preliminary objections on denial of complete inspection including investigation report and on delay, holding the proceedings valid, and found that Noticee 1 and Noticee 2 acting in concert artificially established the opening price of Rs 418 through SPOS and that Noticees 2 to 14 contributed artificial positive LTP in Patch-1.

Full text

Adjudication Order in the matter of M/s Alps Motor Finance Limited Page 2 of 50 BACKGROUND 1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) upon receipt of references from Principal Director of Income Tax Kolkata, Chandigarh andNew Delhi that certain entities have manipulated the prices of various scrips and have generated bogus Long Term Capital Gains(LTCG) through stock exchange mechanism, conducted investigation into the trading in the scrip of Alps Motor Finance Ltd. (hereinafter referred to as “ALPS/ Company”), as ALPS was one of such scrips mentioned in the said references whose market price was manipulated, for the period of June 06, 2014 to July 31, 2015 (i.e. from the date of re-listing at the Stock Exchange, Bombay Stock Exchange Limited (BSE) till the end of price fall– this period would be hereinafter referred to as “Investigation Period”) for the possible violation, if any, of the provisions of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) and rules and regulations made thereunder.

Adjudication Order in the matter of M/s Alps Motor Finance Limited Page 3 of 50 orders were in the range of ₹0.55 to ₹2.00. Investigation further noticed that Noticee 1 i.e. Vishnudham Marketing Private Limited had placed buy orders of 5000 shares at a price of ₹418 at 09:42:06, when the other pending buy orders were in the range of ₹0.05 to ₹11. The above buy order of Noticee 1 matched with the pending sell orders of Noticee no. 2 and the opening price of the scrip was discovered at ₹418 through SPOS. Investigation observed that the net profit of the Company in the financial years before listing at BSE was in the range of ₹0.08 lacs to ₹9.16 lacs during the financial year 2009-10 to 2013-14 and the net profit of the Company after listing at BSE was ₹6.79 lacs in the year 2014-15 and ₹3.50 lacs only in the year 2015- 16, which indicated that the financials were not at all strong and the price discovered through SPOS was not commensurate with the financials of the Company, meaning thereby, the financial performance of the Company could not justify or support the price discovered through SPOS in the scrip of the Company. Investigation also observed that that the price discovered through SPOS was also not supported by corporate announcements of the Company during the relevant period. It is further unearthed that Noticee 2 had received 1.1 lacs physical shares of the Company from one of the suspected group entities, Accurate Buildwell Private Limited on May 11, 2012. He demateria

Adjudication Order in the matter of M/s Alps Motor Finance Limited Page 4 of 50 Investigation revealed that Noticees 2 to 14 have executed 30 trades amongst them and with those 30 trades Noticees 2 to 14 have contributed to ₹26.40 towards the positive Last Traded Price (hereinafter referred to as “(+) LTP / positive LTP”) which is 21.04% of the total market positive LTP in the scrip noticed during Patch-1 of the Investigation Period. Investigation also observed that in the aforementioned 30 trades that have led to contribution of positive LTP in the scrip of ALPS, Noticees 6 to 14 were acting as buyers while Noticees 2 to 5 were acting as their counterparties / sellers. Investigation further unearthed that the 4 Noticees i.e. Noticees 2 to 5 had received physical shares from other suspected group entities and have dematerialized the shares prior to the Investigation Period which were sold by them on market during the Investigation Period including SPOS and have also contributed to higher LTP in the scrip of ALPS. The trading pattern of the Noticees revealed that the Noticees 2 to 14 were acting in concert, and had placed the orders at a higher price than the LTP, which impacted the price of the scrip thereby contributing significantly to the price rise in the scrip apart from creating misleading appearance of trading in the scrip in the minds of the other investors and market participants. Keeping in view of the aforesaid findings from the investigation, it has been alleged t

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