sebi:WTM/MSS/ISD/18/2009
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Facts / Headnote
Noticees 1, 4 and 5 held to have dealt in KLG Capital Services Ltd. shares while in possession of UPSI and Noticees 1, 2 and 3 held to have communicated UPSI, violating Regulation 3(i)/(ii) of PIT Regulations, 1992 and Section 12A(d)/(e) of SEBI Act, 1992; Noticees debarred from securities market and directorships for 2-5 years and Noticees 1, 4 and 5 directed to disgorge unjust enrichment with 12% interest.
Provisions invoked
- s. 19
- s. 12A
Regulations
- Reg. 11
- Reg. 2(c)
- Reg. 3
- Reg. 2
- Reg. 2(e)
- Reg. 2(h)
- Reg. 2(k)
- Reg. 11(f)
Parties
- Mr. Hemant R. Patel
- Hemant R. Patel HUF
- Mr. Praveen Mohnot
- Mr. N. Ravichandran
- Ms. Priyanka Singhvi
- Mrs. Anita Ravichandran
Holding
Noticees connected with acquirer APPL/SKIL/NSBL who had access to UPSI of impending takeover of KLG by APPL are insiders and Noticees 1, 4 and 5 trading while in possession thereof and Noticees 1-3 communicating it violated insider trading prohibitions, attracting market debarment and disgorgement.
Full text
2 of 14 Therefore, the noticees violated various provisions of the SEBI Act, 1992 and the SEBI (Prohibition of Insider Trading) Regulations, 1992 (PIT Regulations). The SCNs called upon them to show cause as to why suitable directions under sections 11, 11B and 11(4) of the SEBI Act, 1992 read with regulations 11 of PIT Regulations should not be issued to them.
3 of 14 UPSI to noticees 4 and 5, who are relatives of noticees 2 and 3 respectively. The noticees 1, 4 and 5 dealt in the shares of KLG while in possession of the UPSI before February 28, 2008. They placed and revised orders in tandem and in sync with that of APPL. They got finance from the same source, Starwort Enterprises Pvt. Ltd. (SEPL).
4 of 14 6. The following facts support the connection between the noticees and the relevant entities: i. The noticees are connected to one another in the following manner: • Noticee 1 a. He is President of SKIL, a promoter group company of APPL. b. The KYC records of APPL with NSBL carry his mobile number (9820286203) and e- mail address (hemantpatel@skilgroup.co.in). c. He interacted with NSBL for opening account of APPL for acquisition of shares of KLG. d. He spoke to the promoters of KLG, the target company and found out that the promoters were looking for buyers for their stake in KLG. e. He became a director of KLG after its acquisition. • Noticee 2 a. He is Executive Director of SKIL, a promoter group company of APPL. b. He brought the open offer deal to NSBL from APPL. c. On behalf of APPL, he signed the assignment mandate with NSBL to serve merchant banker for the open offer. d. He became a director of KLG after its acquisition. • Noticee 3 a. He is Director of SKIL, a promoter group company of APPL. b. He was party to lunch room discussion about the acquisition of KLG by APPL. • Noticees 4 and 5 They are relatives of noticees 2 and 3 respectively. ii. The trading behaviour of the noticees 1, 4 and 5 has striking similarity and is in sync with that of APPL. iii. The noticees 1, 4 and 5 financed their transactions from the same source, namely SEPL, an associate company of HIL. iv. APPL and SKIL are promoter group companies of HIL. SEPL is an associate company of HIL. T
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Source: SecMarx — sebi:WTM/MSS/ISD/18/2009. 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.