sebi:WTM/GA/52/ISD/2/08
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Facts / Headnote
Ad interim order dated April 27, 2006 confirmed against Opee Stock-Link Ltd. and Shri Deepak Shantilal Jain
Provisions invoked
- s. 19
Regulations
- Reg. 3
Parties
- Opee Stock-Link Ltd.
- Shri Deepakkumar Shantilal Jain
Holding
The ad interim ex parte order dated April 27, 2006 directing Opee Stock-Link Ltd. and Shri Deepak Shantilal Jain not to buy, sell or deal in the securities market is confirmed, as they prima facie violated the FUTP Regulations and DIP Guidelines by cornering IPO shares through the use of numerous demat accounts held in the names of name-lenders.
Full text
Page 2 of 23 order dated April 27, 2006 inter alia directed various key operators including Shri Deepakkumar Shantilal Jain and Opee Stock-Link Ltd. not to buy, sell or deal in the securities market including in IPOs, directly or indirectly till further directions as it was inter alia found that they had prima facie violated the provisions of Regulation 3 of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (for short the FUTP Regulations) and the provisions of Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (for short DIP Guidelines). It was further directed to treat the said interim order as show cause notice against the entities named therein and an opportunity was also provided to the said entities to file their objections, if aggrieved. 2.1 Opee Stock Link Ltd. (for short Opee) vide letter dated nil (received by SEBI on May 10, 2006) inter alia stated that it had not violated the provisions of the FUTP Regulations and that the interim order of SEBI dated April 27, 2006 was passed without giving an opportunity of hearing. Opee contended that it had not made even a single application in the public issue of Jet Airways Ltd. (for short, Jet) and that the allegation that it had cornered the shares in the said IPO was not correct. Opee added that it had not financed anybody to make application in the public issue of Jet. It claimed that all 55
Page 3 of 23 were persons on whose behalf Opee sold the shares and thereafter made payment to them for the shares which were sold. Opee further clarified that it had sold the said shares through the stock broker viz. Mahipat Raichand Share Brokers Pvt. Ltd. Opee claimed that it was engaged in buying and selling in the capital market and that it had bought shares from different individuals who were desirous of selling their shares. It added that the same practice was followed in the case of Jet. According to Opee, it had not made any arrangement or agreement with any individual with respect to the public issue of Jet. It also requested for an opportunity of hearing. 2.2 Shri Deepakkumar Shantilal Jain (for short Shri Jain) vide letter dated nil (received by SEBI on May 10, 2006) inter alia stated that he had received 2,36,859 shares of IDFC Ltd. from 686 demat accounts. According to him, the holders of the said demat accounts approached him and requested him to sell such shares as they were not having trading accounts and accordingly, he purchased the said shares. He also stated that the said shares were transferred in his name and thereafter the payment was made to the different clients. He claimed that he did not finance the investors. He further submitted that the shares which were credited to his demat account were from individuals who were existing, identifiable legal entities. He claimed that he had not played any fraud or scheme to defraud the public at large. He also r
Page 4 of 23 submissions on behalf of the entities. The submissions were mostly on the lines of written representations. It was inter alia submitted that, Shri Jain was a student and also a relative of one of the directors of Opee and used to attend the office of Opee on regular basis to learn the business. Pursuant to the hearing, the entities were advised to provide certain information / documents including the details of shareholding and directors of Opee, demat account/ bank account opening details of Shri Jain, ledger accounts, statement of the parties (including the address) who sold shares to Shri Jain etc. 2.4 Opee vide letter dated February 15, 2007 inter alia submitted the copy of the ledger account statement from its stock broker M/s Mahipat Raichand for the period April 01, 2004 to March 31, 2005, copy of Income Tax Returns for the year 2004-2005 and 2005- 2006 along with the statement of income. In the said letter it was emphasized that Mr Deepak Shantilal Jain was a student and relative of one of the directors of Opee and that he was attending office on regular basis to learn the business. 2.5 Shri Jain vide letter December 25, 2006 inter alia stated that he was a student doing Master of Business Administration during the relevant time. He also enclosed the his demat account transaction statement from January 1, 2003 to November 30, 2006, statement with address of different clients from whom the shares were purchased by him, copy of his ledger account in the boo
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Source: SecMarx — sebi:WTM/GA/52/ISD/2/08. 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.