sebi:WTM/GM/ISD2/CDD/16/MAR/2017
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Facts / Headnote
Prayers for setting aside interim orders rejected; directions in ad-interim ex-parte orders dated March 2, 2016 and May 24, 2016 confirmed subject to relaxations granted, to continue till further directions pending investigation.
Provisions invoked
- s. 11
- s. 11(4)
- s. 19
- s. 12(1)
- s. 12A
- s. 28A
Regulations
- Reg. 3(d)
Holding
The Noticees failed to make out a prima facie case for revocation, so the restraints from accessing the securities market imposed by the interim orders dated March 2, 2016 and May 24, 2016 are confirmed subject to relaxations, and shall continue till further directions pending detailed investigation.
Full text
Page 2 of 31 2016 (hereinafter referred to as “the first interim order”), restrained 16 entities, from accessing the securities market and further prohibited them from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, till further directions. The first interim order was passed pursuant to preliminary examination that revealed that highly concentrated positions in Castor Seed Contracts were taken by 4 Commodity Trading Members for 12 clients who defaulted in payment of margins and sought squaring off of positions. The first interim order concluded that prima facie four Commodities Trading Members and their defaulting clients had disturbed market equilibrium and sought to manipulate the market thereby contravening the provisions of the Securities and Exchange Board of India Act, 1992("the SEBI Act") and attracting the prohibitions enshrined in section 12A (a), (b) and (c) of the SEBI Act and Regulations 3(d), 4(1) and 4(2) (a) and (g) of the Securities and Exchange Board of India(Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ("PFUTP Regulations") .
Page 3 of 31 during the relevant period of time. NSAIL was also found prima facie to be a Ruchi Group Company (as per website of Ruchi group), the Independent Director Mr Navin Khandelwal also being common to both NSAIL and Ruchi Soya. A prima facie view was taken that Ruchi Soya provided funds to the aforesaid entities for creating / maintaining open position in long side of Castor Seed Contracts. (All 6 entities i.e. Ruchi Soya and the 5 entities are collectively referred to as "Ruchi Group entities"). Open positions held by 'Ruchi Group Entities' were treated as clubbed position in view of the fact that, though the position in Castor Seeds were taken by different clients through different Commodity Trading Members, there was a meeting of minds and intention to corner the market on long side of Castor Seed Contracts by 'Ruchi Group Entities' on account of clubbed position held by 'Ruchi Group Entities' in Castor Seed Contracts. Accordingly vide the second interim order, Ruchi Soya and NSAIL were also restrained from accessing the securities market and prohibited from buying, selling or dealing in securities till further directions.
Page 4 of 31 6. The dates on which the Noticees appeared before me and the dates on which written submissions were filed in relation to the interim orders are as follows:
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Source: SecMarx — sebi:WTM/GM/ISD2/CDD/16/MAR/2017. 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.