sebi:WTM/GA/55/ISD/3/06

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

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Facts / Headnote

No further directions issued; matter disposed

Provisions invoked

Regulations

Parties

Holding

The Whole Time Member held that the proceedings against RP&C International Limited and Coral Reef Inv. Co. Private Limited do not warrant any further directions and disposed of the matter.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ DIRECTIONS UNDER SECTION 11 AND 11B OF SEBI ACT, 1992 READ WITH REGULATION 11 OF SEBI (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING TO THE SECURITIES MARKET) REGULATIONS, 2003, AGAINST RP&C INTERNATIONAL LIMITED - FII AND CORAL REEF INV. Co. PRIVATE LIMITED, SUB-ACCOUNT OF FII – RP&C INTERNATIONAL LIMITED.

1.0 BACKGROUND 1.1 RP & C International is a Foreign Institutional Investor (FII) registered with Securities and Exchange Board of India. Coral Reef Inv. Co. Private Limited was a Sub Account of RP&C International, the aforesaid 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

indicated that there was no genuine interest of trading in the GTB scrip and a small 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 RP & C International (hereinafter referred to as “RP & C”) named Coral Reef Inv. Co. Pvt Ltd (hereinafter referred to as “Coral Reef” ) 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 RP &C and Coral Reef from trading in the shares of GTB till the completion of investigations. After affording a post decisional hearing on February 03, 2003, the interim directions were revoked on 12/6/2004 for the reasons stated therein. 2.0 SHOW CAUSE NOTICE AND RP & C’S REPLY 2.1 Subsequently, a show cause notice dated 30.6.04 under Section 11 and 11B of SEBI Act , 1992 read with Regulation 11 of SEBI(Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market)Regulations, 2003 was issued to RP & C and Coral Reef advising it to show cause as to why suitable directions be not issued to them

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Source: SecMarx — sebi:WTM/GA/55/ISD/3/06. 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.