sebi:WTM/GA/41/IVD/1/06

SEBI · SEBI · 2002-12-31 · G. Anantharaman, Whole Time Member

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

Provisions invoked

• s. 11

Regulations

• Reg. 11
• Reg. 4(b)
• Reg. 1

Parties

• Kallar Kahar Investments Limited
• Credit Suisse First Boston (Mauritius) Ltd

Full text

1.0 BACKGROUND 1.1 Credit Suisse First Boston (Mauritius) Ltd (formerly known as Kallar Kahar Investments Ltd) was a Sub Account of Credit Suisse First Boston, an FII registered with SEBI. 1.2 The scrip of Global Trust Bank (hereinafter referred to as GTB) witnessed significant price rise accompanied with rise in volumes during the financial year 2000-2001. It was noticed that the price had actually gone up from a low of Rs.57.00/- on October 11, 2000 to Rs.114.70/- on November 20, 2000 (on BSE), i.e., an increase of more than 100% in just 29 trading sessions. During the same period the prices on NSE had gone up from a low of Rs.57.05/- to a high of Rs.114./-. For the period from September 1, 2000 to October 10, 2000 the average daily volumes on BSE were below 38,000 while the same had increased to more than 7,70,000 during the period of October 25, 2000 to November 23, 2000. For the same periods the average daily volumes on NSE were 4,20,000 and 12,96,000 respectively. 1.3 An investigation was ordered by SEBI into the buying, selling and dealing in the scrip of GTB under the provisions of the SEBI Act, 1992 read with SEBI ( Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 and other SEBI Regulations. 1.4 During the course of Investigations, it was observed that there was significant concentration of trading among a few brokers and common clients associated with Ketan Parekh ("KP"). An analysis of the trading of the clients

group of brokers and investors had created artificial volumes and price manipulation in the scrip. 1.5 It was further observed that KP entities had purchased shares from the promoter group in synchronized manner and later parked it with some FIIs and OCBs thereby creating the artificial volume in the scrip. OCBs and certain sub-account including Sub account of Credit Suisse First Boston("CSFB")- Kallar Kahar Investments Limited (hereinafter referred to as "KKIL) were used by KP entities for circular trading, parking of shares, creation of artificial market and volumes, building up of concentration in select scrips, circumvention of Takeover Regulations, etc. 1.6 Therefore, SEBI vide interim order dated 31.12.2002 prohibited 50 entities including the KKIL from trading in the shares of GTB till the completion of investigations. After affording a post decisional hearing on February 03, 2003, the

2.2.1 that it was not related to or associated in any manner with Ketan Parekh or entities related to him. 2.2.2 that there is no evidence to suggest that the impugned transactions were financing transactions. On the other hand it was contended that the transactions were genuine transactions and were settled for delivery versus payment. It purchased shares from CSFB India and paid the purchase consideration to CSFB India or to the Clearing House (depending on the nature of settlement i.e. Delivery versus Payment or Clearing House Trade) and similarly sold shares through CSFB India and received the sale proceeds from CSFB India or from the Clearing House (depending on the nature of settlement i.e. Delivery versus Payment or Clearing House Trade)/ it did not make any payment to, or deal in any way with, KP entities or Overseas Corporate Bodies ("OCBs") for the transactions referred to in the SCN and, therefore, there is no basis for the allegation that these transactions were financing transactions. 2.2.3 that it executed each of the transactions listed in the show cause notice in order to hedge participatory notes issued to its offshore clients. None of the clients were related to KP or the OCBs named in the show cause notice. During the relevant period nine participatory notes were issued. Eight were purchased by BNP Hong Kong branch and one was purchased by Indocam, Himalayan Fund. 2.2.4 that there was no evidence whatsoever of any parking arrangement entered into by it with

Source: SecMarx — sebi:WTM/GA/41/IVD/1/06. 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.