sebi:WTM/PS/05/ISD/APR/2015

SEBI · SEBI · 2005-09-28 · Prashant Saran, Whole Time Member

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Facts / Headnote

Restrained the Company, its promoter/directors and inter-connected clients from accessing the securities market and from buying, selling or dealing in securities directly or indirectly for a period of two (2) years; found violations of PFUTP, Insider Trading and Takeover Regulations; directed disposal of SCNs against Mr. Kiran Dhanavade, Mr. Amul Sheth, Mr. Vikas Narnawar, Mr. Jayesh Shah and Mr. Rajendra Kumar Gajananad Adukia without any directions.

Provisions invoked

• s. 11B
• s. 11(4)
• s. 19

Regulations

• Reg. 11
• Reg. 3
• Reg. 4
• Reg. 12
• Reg. 13(3)
• Reg. 3(a)
• Reg. 4(2)(k)
• Reg. 44

Holding

IFSL Limited, its promoter Sonal Fincap, its directors and the inter-connected clients were held liable for fraudulent and unfair trade practices in the scrip of IFSL, including premature and false corporate announcements, off-market transfer of promoter shares to interconnected clients who executed synchronized/structured trades influencing price and volume, and failure to make requisite disclosures. The noticees were restrained from accessing the securities market and dealing in securities for a period of two years.

Full text

Page 2 of 32 ____________________________________________________________________________ 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') upon noticing sudden spurt in the price and trading volume in the scrip of IFSL Limited (hereinafter referred to as 'IFSL' or 'the Company') conducted a preliminary examination in the scrip. The shares of IFSL were listed in the year 1996. It was observed that the price of the scrip had increased in about 200 trading days from ₹15 to ₹233 during the period of September, 2004 to June, 2005. The shares of the Company underwent share split on July 01, 2005 wherein a share worth ₹10 was split into share worth ₹1. Thereafter, the price of the scrip again increased from ₹26.70 as on July 01, 2005 to ₹33.65 as on September 13, 2005.

Page 3 of 32 The preliminary examination in the matter also revealed that the Company had attempted to show profits by taking into account the sale of unquoted shares along with other corporate announcements about unrelated business of implementing power projects through the acquisition of a company (SanInfra Trading Pvt. Limited) of which no documents were produced to substantiate the claim. The promoters of IFSL were found simultaneously off loading their holdings in off market transactions to certain clients who in turn had sold the shares in the market. In view of such prima facie observations, SEBI, vide an ad interim ex-parte order dated September 28, 2005 (hereinafter referred to as the 'interim order') had inter alia directed the promoter of IFSL namely Sonal Fincap Pvt. Limited (hereinafter referred to as 'Sonal Fincap') and the directors of IFSL viz. Mr. P. K. Singh, Mr. Ramdas Kshisagar, Mr. Mukesh Vora, Mr. Dilip Kulkarni, Mr. Rishi Vashist, Mr. N. Narendra and Mr. Rakesh Singhvi not to buy, sell or deal in the securities of IFSL, directly or indirectly, till further directions, in this regard. IFSL was directed not to issue any equity shares or any other instrument convertible into equity shares, in any manner or not to alter its capital structure in any manner, till further directions. The clients, namely New Leader Trading Co. Pvt. Limited, Sharpline Trading Co. Pvt. Limited, Right Star Trading Co. Pvt. Limited, Stockholm Mercantile Co. Pvt. Limited, White Moon

Page 4 of 32 IFSL during the period of examination. These have been categorized, on the basis of their connections and dealings as detailed hereunder: a. 'Group I' consists of clients namely Newleader Trading Co. Pvt. Limited, Sharpline Trading Co. Pvt. Limited, White Moon Mercantile Co. Pvt. Limited, Mr. Vivekanand Daji Patankar, Mr. Santosh Pawar, Mr. Kiran Dhanavade, Mr. Jaydeep Mane, Right Star Trading Co. Limited, Mr. Dattu Shitloe, Mr. Amar Adhav, Mr. Deepak Narvekar, Mr. Umesh Choukekar, Fineline Mercantile Co. Pvt. Limited, Mr. Ganesh Raut, Mr. Deepak Todkar, Mr. Mahesh Kokate, Mr. Santosh Jagtap, Vishal Kumar Textiles Limited, Mr. Ajit Suryavanshi, Stockholm Mercantile Co. Pvt. Limited, Mr. Rajkishore Singh, Mr. Santosh Narvekar, Mr. Jayesh Waghela, Mr. Haresh Posnak, Mr. Sandeep Kadam, Mr. Prakash Yadav, Mr. Vijay Suryavanshi, Mr. Ranjan Mandal, Mr. Jay Shah, Mr. Dadasaheb Gavhane, Mr. Amit Mehta, Mr. Tejas Thakkar, Mr. Vinod Khetan, Ms. Anita Khetan, Mr. Lokesh Kapoor, Cardiod Marketing Pvt. Limited and Mr. Paras Chaplot; b. 'Group II' consists of clients namely Khodiyar Industries Limited, Mr. Amul Seth, Mr. Vikas Narnaver, Mr. Jayesh Kumar Shah, Mr. Bachubhai Koyani, Mr. Dilipkumar Shantilal Mehta, Mr. Kamlesh Rasiklal, Mr. Sureshbhai Baldha, Mr. Rajender Kumar and Mr. Mukesh Soni.

Source: SecMarx — sebi:WTM/PS/05/ISD/APR/2015. 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.