sebi:SD/AO/09/2011
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Facts / Headnote
Violation established; penalty of Rs.25,00,000 imposed under Section 15HA
Provisions invoked
- s. 15
- s. 15H
- s. 15J
Regulations
- Reg. 3
- Reg. 4(1)
Parties
- Vijay Kumar Gupta
Holding
The Noticee, as Managing Director of VTL, violated Regulations 4(1), 4(2)(e) and 4(2)(r) of PFUTP Regulations, 2003 by planting false/misleading export-order announcements and omitting proper disclosure of non-materialization, and is liable to penalty under Section 15HA of SEBI Act.
Full text
Page 2 of 12 observed that VTL made misleading announcement regarding bagging of export order from a Swiss Firm on February 21, 2005 and February 24,
Page 3 of 12 NOTICE, REPLY & HEARING 5. A Show Cause Notice (hereinafter referred to as ‘SCN’) bearing no. EAD- 2 /SD/AB/125045/2008 dated May 08, 2008 was issued to the Noticee in terms of the provisions of Rule 4 of SEBI (Procedure for Holding Enquiry & Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as “the Rules’), requiring the Noticee to show cause as to why an enquiry should not be held for the violations alleged to have been committed by the Noticee. It is noted that Noticee has filed replies dated December 09, 2008 and July 31, 2010.
Page 4 of 12 v) The Noticee further submitted that a company based in Switzerland approached VTL and expressed an interest in purchasing fabrics. Accordingly, a presentation was made to Swiss Firm. Subsequently in February 2005, the Noticee received a letter by way of fax from Simran Enterprises wherein it inter-alia expressed a desire to source their requirement of furnishing fabrics worth USD$4.6 millions within a period of 12 months. Based on the said letter, the Noticee had made disclosure to the BSE as the same was price sensitive information and complied the provisions of Listing Agreement. vi) VTL vide its letter dated March 10, 2005 requested the Simran Enterprises to expedite the submission of Irrevocable Letter of Credit in favour of the Noticee for the value of the order placed by it. Since, no reply was received from Simran Enterprises, the Noticee again vide its letter dated May 02, 2005 reminded it about the Letter of Credit and vide its letter dated February 02, 2006 requested Simran Enterprises to confirm about the status of Letter of Credit and informed that if it failed, VTL would not be in a position to process the order. Since, no response was received from Simran Enterprises, VTL finally made a disclosure in its audited accounts for the quarter ending September 2006 about the non materialisation of the said export order. The same was published in Business Standard dated October 28, 2006. Therefore, the announcement made by the Noticee was not false/mislea
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Source: SecMarx — sebi:SD/AO/09/2011. 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.