sebi:WTM/MSS/ISD/31/09
Facts / Headnote
Proceedings disposed of on merit; noticees found to have violated regulation 3(a) and (c) of PFUTP Regulations; unlawful gains impounded, trading restrained for 3 years, and amount transferred to Consolidated Fund of India.
Provisions invoked
- s. 11
- s. 19
Regulations relied on
- SEBI (PFUTP) Regulations, 2003 — 3(a)
- SEBI (PFUTP) Regulations, 2003 — 3(c)
Parties
- Mr. Deven Patel
- Mr. Tejas Patel
- Ms. Smitaben N. Shah
Holding
The noticees were found to be part of the connected buyers who employed a structured scheme to provide an exit to the QIB on the day of listing, thereby violating regulation 3(a) and (c) of the PFUTP Regulations. Directions were issued impounding unlawful gains of Rs. 2,36,18,339 and restraining the noticees from dealing in the securities market for 3 years.
Full text
Page 2 of 7 Vacuf Ltd. (Vacuf) and ITF Mauritius (ITF) subscribed for 43.67 lakh shares in the QIB category and received allotment of the entire QIB entitlement of 28.85 lakh shares. The SCN alleges that the connected buyers, which include the noticees, arranged QIB subscription with the assurance of an exit opportunity to the QIB so that the issue could go through. They bought 97% of 28.85 lakh shares in a structured manner from the QIB on the day of listing and thereby cornered the NCL shares. Therefore, they violated the provisions of regulation 3 (a) and (c) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (PFUTP Regulations). Accordingly, the SCN called upon the noticees to show cause as to why suitable directions under regulation 11 of the PFUTP Regulations read with Sections 11(4) and 11B of the SEBI Act, 1992, including a direction to impound and retain the money already withheld, should not be passed against them.
Page 3 of 7 seconds of the order placement by Vacuf. These orders resulted in trades for 9,29,805 shares between Vacuf and the connected buyers. The details of these orders are as under: Original Order Modified Order Name of Connected Buyer Time Price (Rs.) Time Price (Rs.) Sonaliben Dhirenbhai Vora 9:56:27 39.00 10:35:36 46.50 Park-Light Securities Limited 9:57:52 39.00 10:35:38 46.50 Deep Infrastructure Pvt. Ltd. 9:58:35 39.00 10:35:41 46.50 Smitaben N. Shah 10:10:14 30.00 10:35:53 46.50 Tejas Patel 10:10:21 30.00 10:35:50 46.50 Deven Patel 10:10:29 30.00 10:35:47 46.50 Patel Kirtiben Rajeshkumar 10:10:39 30.00 10:35:44 46.50 Rupesh Balwantbhai Brambhatt 10:10:49 30.00 10:35:41 46.50 Rajesh Balwantbhai Brambhatt 10:11:00 30.00 10:35:37 46.50 10:36:10 46.50 No modi 46.50 10:36:18 46.50 No modi 46.50 10:36:26 46.50 No modi 46.50 Mahesh Kumar Gandhi 10:36:39 46.50 No modi 46.50 5.2 Venus, who had received 9,61,539 NCL shares, placed a sale order of 9,61,538 shares at 10:53:47 AM on December 29, 2006 on BSE through the broker, M/s. IKAB Securities and Investment Ltd. at a limit price of Rs.47.50. The connected buyers, who had placed orders through different brokers prior to the sale order of Venus, modified their orders to an uniform price of Rs.47.50 within 32 seconds of the sale order of Venus during a 15-second window from 10:54:04 AM to 10:54:19 AM. These modifications resulted in trades for 9,20,638 shares between Venus and the connected buyers. The details of these orders
Page 4 of 7 5.4 The following table presents the summary of the trades between the QIB and the connected buyers: No. of NCL shares bought from Vacuf on NSE Venus on BSE ITF on NSE Name of Buyer
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Source: SecMarx — sebi:WTM/MSS/ISD/31/09. 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.