sebi:WTM/KMA/IVD/314/11/2010
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Facts / Headnote
Interim directions issued vide ad-interim ex-parte Order dated December 1, 2009 confirmed; applications to sell shares rejected; investigation to be completed before February 28, 2011.
Provisions invoked
- s. 19
Parties
- M/s. Mahasagar Securities
- Mr. Rajesh Kumar Vyas
- Mr. Bhupendra Singh Rathore
Holding
The Whole Time Member confirmed the interim directions issued against M/s. Mahasagar Securities, Mr. Rajesh Kumar Vyas and Mr. Bhupendra Singh Rathore vide the ad-interim ex-parte Order dated December 1, 2009, and rejected their applications seeking permission to sell shares lying in their demat accounts.
Full text
Page 2 of 10 course of business. The entities further stated that they would file additional/supplementary replies after receipt of the documents requested by them in the said letters. Thereafter, an opportunity of personal hearing was granted to the entities on February 9, 2010. In the meanwhile, the entities had intimated that they had filed applications for availing consent orders in terms of SEBI Circular dated April 20, 2007. However, the said applications were not processed because of the ongoing investigation in the matter. SEBI, vide letter dated April 26, 2010 had further provided the relevant information/documents, to the entities, as requested by them. Subsequently, M/s Mahasagar Securities, vide letter dated May 26, 2010 made further submissions in the matter. Mr. Bhupendra Singh Rathore and Mr. Rajesh Kumar Vyas made submissions, vide letters dated June 15, 2010 and June 16, 2010, respectively. On July 15, 2010, Mr. J. J. Bhat, Advocate represented M/s Mahasagar Securities and made
Page 3 of 10 having connection/relation in any manner with the “Surana Group”. As regards the off-market trades, it contended that the same were permissible and were not aware that the parties who bought/sold the shares of the Company in off- market became its counter parties to it in the market. According to it, the alleged connection between the parties of its off-market trades and the on-market counterparties on seven days involved only small quantities of shares and that this did not cause any aberrations in the price discovery. The representative who appeared on behalf of Mr. Bhupendra Singh Rathore, while making similar
Page 4 of 10 patch, as observed in the Order). During the period June 29, 2009 to September 23, 2009 (second patch), the share price was in the range of `139.15 to `615.25/-. Subsequently, the share price had increased from `595.65/- to `1114.45/- till November 11, 2009. Mahasagar Securities and Mr. Bhupendra Singh Rathore were found to be the top purchasers on net basis during the second patch, as observed in the Order. The movement of shares, in off market and through stock exchange during the second patch among various entities including Mahasagar Securities and Mr. Bhupendra Singh Rathore and Mr. Rajesh Kumar Vyas Group were given in Table 5 to the Order. While referring to the said Table, the Order in paragraph 15 thereof observed that “……..the cycle of off-market transfer and market transaction i.e. purchase through market, has been repeated a number of times among various entities in the same/similar manner wherein either Leela Surana R. (in first patch) or Bhupendra Singh Rathore/Mahasagar Securities/Rajesh Kumar Vyas (in second patch) they had purchased shares initially from the market and then carried out an off market transfers to various related entities. Then they had once again purchased the shares that are transferred off-market from such entities on a subsequent day by carrying out market transaction on exchange platform.” The share price of the Company during the second patch had increased substantially as stated above, on lower volumes (approximately 21,000
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Source: SecMarx — sebi:WTM/KMA/IVD/314/11/2010. 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.