sebi:WTM/GA/ISD/42/11/07

SEBI · SEBI · 2006-04-27 · G. ANANTHARAMAN, WHOLE TIME MEMBER

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Facts / Headnote

Confirmed the ad interim ex parte order dated April 27, 2006 against Ms. Himani Patel

Provisions invoked

• s. 11
• s. 19
• s. 11(4)
• s. 11B
• s. 12(3)

Regulations

• Reg. 3

Parties

• Ms Himani Patel

Holding

The Whole Time Member confirmed the ad interim ex parte order dated April 27, 2006 restraining Ms. Himani Patel from buying, selling or dealing in the securities market. She was prima facie held to be a key operator who cornered IPO shares in violation of the FUTP Regulations and DIP Guidelines.

Full text

names with each of the applications being of small value so as to make it eligible for allotment under the retail category. The said demat accounts opened in fictitious/ benami names are hereinafter referred to as the afferent accounts. It was further revealed that, subsequent to the allotment of IPO shares, the fictitious/benami allottees had transferred the said shares to their principals who were prima facie identified by SEBI as key operators / master account holders. The modus operandi as detailed above led to the prima facie view that the thousands of entities in whose names demat accounts and bank accounts had been opened and IPO applications made, were either benami (name lenders) or non existent. 1.2 In the above facts and circumstances, SEBI vide an ad interim ex parte order dated April 27, 2006 inter alia directed various key operators including Ms Himani Patel 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

obligations. She added that the consideration for transfer of the securities to her was calculated based on the cost of borrowing. She claimed that depending on the circumstances, she had either retained the securities or sold them at profit. She stated that in order to finance and to ensure the security of the amount lent, she opened joint bank accounts with the loanees and deposited money into the said accounts. She also enclosed the details of 22 joint bank accounts in Kalupur Commercial Co- operative Bank Ltd., (Bodakdev, Panchvati and Kalupur Branches) opened by her with the purported applicants. In all such accounts, Ms Patel was shown as the first account holder. The details of some of the joint bank accounts (as per her reply) are as follows. Sr.No. Account No. Date of opening 1st account holder 2nd account holder 3rd account holder 4th account holder 1 4178 March 4, 2005 Ms Patel Rupesh B Shah Pinaben H Shah N.A. 2. 4179 March 5, 2005 Ms. Patel Bhupendra N Shah Nirmala B Shah Jignesh B Shah 3 4200 March 25, 2005 Ms. Patel Hiren Patel Trupti B Patel Shobhana A. Patel 4 4201 March 25, 2005 Ms. Patel Ashok M Patel Bharat M Patel Virendra M Patel 2.2 Ms Patel claimed that the payment for the securities purchased was made from her account, but the refunds were credited into the joint accounts. She added that the refunds were subsequently transferred to her personal account. She urged that the 61 persons financed by her were having demat accounts with depository participan

2.3 According to her, she had not subscribed to the shares in the IPO of Suzlon Energy Ltd. and that she had not committed any fraud which adversely affected the interest of investors. She stated that she had received shares from the allottees prior to the listing through off market transfers. According to her, she had no reason to believe that the demat accounts opened by the loanees were either benami or fictitious. She urged that it could not be said that there was parking of securities in her demat account simply because of the fact that she was the financier to the persons and that she had sold shares in the market. She contended that, she would not fall within the definition of the key operator and that SEBI had not brought on record any evidence or facts to show that the persons who transferred shares into her demat account were acting on her instructions or as part of a collective strategy. According to her, she adopted a business model wherein borrowers would sell shares to her after the allotment for a consideration that would reflect both the sale price and the cost of borrowing. She also enclosed the details of share application money financed to the loanees in the IPO of Suzlon Energy Ltd., details of application by loanees in the said IPO and the details of her joint bank accounts. She also requested for an opportunity of hearing. 2.4 SEBI granted an opportunity of hearing to Ms Patel on November 07, 2006. Shri Joby Mathew, advocate appeared before me on the sai

Source: SecMarx — sebi:WTM/GA/ISD/42/11/07. 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.