sebi:WTM/KMA/IVD/280/07/2010
Facts / Headnote
Interim direction confirmed
Provisions invoked
- s. 19
Parties
- Keynote Capitals Limited
Holding
The ex-parte interim Order dated April 23, 2009 prohibiting Keynote Capitals Limited from giving any trade recommendations in respect of companies listed in any of the recognized stock exchanges, till further directions, is confirmed.
Full text
Page 2 of 7 letter dated July 16, 2009 had also furnished a list of research reports issued by it with a ‘BUY’ recommendation of various companies and the names of the media sector companies researched by it.
Page 3 of 7 June 20, 2008 on BSE, the settlement by delivery of shares was done only on July 24, 2008 by Keynote i.e. after more than one month from the date of the transaction. The trade was executed at a price of Rs.250/- per share and thus the total value of the said sale was Rs.34.25 crore. Mr. Nirmal Kotecha had requested Keynote to transfer the credit of Rs.34 crore lying in his trading account with Keynote on account of sale of shares on June 20, 2008 to the account of Mr. P.S. Saminathan by debiting his account with Rs.34 crore, as per his mutual understanding with Mr. P.S. Saminathan. As per the client ledger provided by Keynote, the money was not actually received in Mr. Nirmal Kotecha’s account and only a ledger entry was passed in the books for transferring an amount of Rs.33,99,04,292.28/-, which was the credit lying in Mr. Nirmal Kotecha’s account after adjusting the debit accumulated in his account of Rs.1,57,837.24/-. It is seen that Mr. Nirmal Kotecha gave a post dated cheque dated December 2, 2008 for Rs.25,95,707.26/- to Keynote and requested it to credit the same to the account of Mr. P.S. Saminathan with Keynote and also requested that 13,70,000 shares be transferred to the demat account of Mr. P.S. Saminathan. The balance amount was also paid by Mr. P.S. Saminathan on July 24, 2008. I observe that there was no receipt of funds by Mr. Nirmal Kotecha from Mr. P.S. Saminathan on the date of the transaction and that on the basis of the letter from Mr. Nirmal
Page 4 of 7 market price was only around Rs.408/- (average price on NSE) during the said period. However, in contrast to the same, the research reports of other stock brokers had recommended a buy price in the range of Rs.400/- to Rs.600/-. The prices recommended by certain other stock brokers in their reports are as follows: a. Anand Rathi Securities Limited had recommended a target price of Rs.575/- as on January 30, 2008, when the then prevailing market price was around Rs. 350/- (average price on NSE). b. Religare Securities Limited had recommended a target price of Rs.557/- as on April 21, 2008, when the prevailing market price was around Rs. 353/- (average price on NSE). c. Goldman Sachs Limited had recommended a target price of Rs.499/- as on May 29, 2008, when the prevailing market price was around Rs. 353/- (average price on NSE). d. Religare Securities Limited had recommended a target price of Rs.480/- as on July 7, 2008, when the market price was around Rs. 177/- (average price on NSE). In view of the same, it has been alleged that Keynote had issued non-genuine recommendations in its research reports to facilitate manipulation in the shares of PSTL during the relevant period.
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Source: SecMarx — sebi:WTM/KMA/IVD/280/07/2010. 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.