sebi:WTM/MSS/02/ISD/OCT/08
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Noticee found guilty of IPO manipulation as key operator; directed to disgorge Rs.72 lakh with interest and restrained from securities market for 2 years, with additional 5-year restraint on default
Provisions invoked
- s. 19
- s. 12A
Regulations
- Reg. 3
Parties
- Mr. Dhaval A. Mehta
Holding
The Noticee, Mr. Dhaval A. Mehta, acted as a key operator to corner shares meant for RIIs in the Suzlon and IDFC IPOs in violation of Section 12A and Regulations 3 and 4(1) of PFUTP Regulations, and was directed to disgorge Rs.72 lakh with 10% interest and restrained from the securities market for 2 years.
Full text
Page 2 of 8 16, 2008 at 2.30 PM. In the said letter, SEBI informed the Noticee that in view of said direction of Hon’ble SAT, no extension of time would be considered. However, the Noticee did not submit any written response. Nor did he avail of the opportunity of hearing.
Page 3 of 8 f. He transferred the said 61,920 shares to Ms. Sheelu Lalwani at the instance of the financier - 14,576 shares before the day of listing i.e. on October 18, 2005 and 47,344 shares on or after the day of listing - through off-market transfers (Submission dated June 22, 2006 of the Noticee). g. All the 3,870 demat accounts reflected uniform behaviour /set of transactions. h. Ms. Sheelu Lalwani sold these shares at an average price of Rs. 638. This resulted in an unlawful gain of Rs. 79,25,760 [61,920 *(638-510)]. i. The aforesaid transactions deprived the RIIs of their legitimate share in allotment in the Suzlon IPO.
Page 4 of 8 i. The aforesaid transactions deprived the RIIs of their legitimate share in allotment in the IDFC IPO. 7. I find that there are minor discrepancies in the number of shares transferred by the Noticee and the number of shares sold by the financier and in the dates of such transfer and sale. It is possible that the financier has sold some shares before actual receipt by him from the Noticee or sold more shares than received from the Noticee. This is because the financier received similarly acquired shares from other key operators also. Further, since the shares are held in demat form, it is not possible to know which shares were acquired first and which were sold first. In any case, the charge is limited to acquisition of shares as a key operator through a deceitful design and hence the movement of shares from the Noticee to the subsequent transferees is not that material for the purpose in hand. This transfer is material only to determine the extent of unlawful gain by the Noticee and / or the financier. The following table captures the transactions for better appreciation of facts: Particulars Suzlon IPO IDFC IPO Date of Opening 23.09.2005 15.07.2005 Date of Closing 29.09.2005 22.07.2005 Date of Listing 19.10.2005 12.08.2008 No. of debit entries in the Noticee’s account with Catholic Syrian Bank in respect of the IPO applications 1217 719 No. of debit entries in the Noticee’s account with Centurion Bank of Punjab in respect of the IPO applications 2653 - Total No.
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Source: SecMarx — sebi:WTM/MSS/02/ISD/OCT/08. 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.