sebi:Order/SBM/JR/2021-22/12383

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

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Facts / Headnote

Adjudication proceedings initiated vide SCN dated December 20, 2016 disposed of; Noticee not held to have violated PFUTP Regulations; no penalty imposed

Provisions invoked

• s. 15
• s. 15H
• s. 15I

Regulations

• Reg. 3
• Reg. 4(1)
• Reg. 3(a)

Parties

• Shri Praveen Agarwal

Holding

The Adjudicating Officer held that violation of Regulations 3(a), (b), (c), (d), 4(1), 4(2)(a) and 4(2)(e) of the PFUTP Regulations by Shri Praveen Agarwal was not established and disposed of the adjudication proceedings initiated by SCN dated December 20, 2016 without penalty.

Full text

Page 2 of 16 In the matter of Mystic Electronics Ltd. mentioned investigation period, which also caused substantial price movement in the scrip of MEL.

Page 3 of 16 In the matter of Mystic Electronics Ltd. SHOW CAUSE NOTICE, REPLY AND HEARING 5. Show Cause Notice dated December 20, 2016 (hereinafter referred to as ‘SCN’) was issued to the Noticee under the provisions of Rule 4(1) of the Adjudication Rules to show cause as to why an inquiry should not be initiated against the Noticee and penalty be not imposed on him under the provisions of section 15HA of the SEBI Act for his alleged violation of the provisions of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a) and (e) of the PFUTP Regulations while dealing in the shares of MEL during the above mentioned investigation period.

Page 4 of 16 In the matter of Mystic Electronics Ltd. allotment basis to various entities. It is observed that MEL made a preferential allotment of 92,30,000 shares of Rs. 10 each to 48 entities (who were not the promoters of MEL), on June 07, 2013, at a price of Rs 60.74/- per equity share and raised an amount of Rs. 56.06 crore. The shares issued through the above preferential allotment was under lock-in period till June 06, 2014 and post the lock-in period , some of the allottees in the preferential allotment sold the shares and made profit. As per the findings of the investigation, the preferential allotment proceeds to the tune of Rs. 23 crore was transferred by MEL to the account of ‘connected entities’, who then traded in the scrip of MEL during the investigation period. Investigation has brought out that the ‘connected entities’ based at Kolkata who had predominantly traded in the scrip o f MEL during the investigation period increased the scrip price of MEL by repeatedly placing the buy orders at price higher than the last traded price i.e LTP and also absorbed the sell orders that were available in the market, which was at a higher price than the LTP. Further, investigation brought out that once the scrip price of MEL reached the desired level, some of the preferential allottees exited at a higher price and made substantial gain. From the investigation report, it is observed that 14 entities (who were some of the allottees in the preferential allotment of MEL) sold

Source: SecMarx — sebi:Order/SBM/JR/2021-22/12383. 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.