sebi:WTM/GA/57/ISD/4/06
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Facts / Headnote
Confirmed ad interim ex parte order dated November 30, 2005 against the broker; continued restraint on broker's dealings in CSE pending formal investigation
Provisions invoked
- s. 11
- s. 19
Regulations
- Reg. 7
Parties
- Santosh K Kejriwal Securities (P) Ltd
Holding
The ad interim ex parte order dated November 30, 2005 against Santosh K Kejriwal Securities (P) Ltd is confirmed and continued pending formal investigation, with the restriction to operate with respect to the broker's dealings in CSE.
Full text
1.1 SEBI had found rampant price manipulation in the shares of companies with low market capitalization, commonly referred to as “small cap stocks” or “penny stocks” during the year
Sr. No Scrip Name Period Initial traded price (in Rs.) Last traded price (in Rs.) % increase/ decrease Duration 2 Adinath Bio-labs Ltd. 16/5/05 to 24/11/05 20.80 88 323% 6 months 9 days 3 Globe Stocks & Securities Ltd. 15/7/07 to 24/11/05 19.10 77.65 307% 4 months 10 days 4 Goenka Business & Finance Ltd. 8/4/05 to 24/11/05 60.10 13.60 77% 7 months 17 days 5 Coronet Industries Ltd. 4/4/05 to 24/11/05 160.00 270 69% 7 months 21 days 2. 0 Trading in the scrip of Adinath Bio-Labs Private Limited 2.1 On the basis of material available on record, SEBI made the following preliminary findings with regard to the trading in the scrip of Adinath Bio-Labs Private Limited 2.2 Adinath Bio-labs Ltd. is a “small cap” listed compay at CSE which witnessed a significant price increase during the period under scrutiny. The share price of the company
increased from Rs. 20.80 to Rs. 88, i.e. a rise of 323% in 6 months & 9 days. 2.3 It was observed from the latest annual report of the company received from CSE that in the year 2004-05, the share capital of the company was Rs.5.52 crore against the company’s gross receipts of Rs.20.01 crore which almost exactly accounted for meeting its expenditure (Rs.19.69 crore), leaving a net profit (PAT) for the year of Rs.5 lakh. During the previous year also the company’s net profit (PAT) was Rs.8 lakh. 2.4 As per the latest compliance report obtained from CSE, the company had failed to submit the following documents / reports with the exchange: a) Share-holding pattern in respect of 1st and 4th quarter for the year 2002-03, 1st and 2nd quarter for the year 2003-04 and 2nd quarter for the year 2004-05. b) Unaudited quarterly results in respect of 2nd quarter for the year 2005-06. 2.5 Thus, the available information indicated that the financial performance of the company has been consistently not so impressive and certainly not enough to generate a sudden burst of investor expectation to warrant a sharp rise in share price of 323% in six months. The fact that the company has not bothered to file the shareholding pattern since 2002-03 also reflected on the attitude of the company and its scant respect towards disclosures. 2.6 An analysis of the trading data revealed that primarily four brokers had traded in the scrip, the details of which are given below:
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Source: SecMarx — sebi:WTM/GA/57/ISD/4/06. 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.