sebi:WTM/PS/ISD/15/MAY/2012
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Facts / Headnote
Directions issued vide the ad interim ex-parte Order dated September 21, 2011 modified to the limited extent of allowing JMP Securities Private Limited to sell the securities held by it in its demat accounts, subject to depositing sale proceeds in a bank fixed deposit and not withdrawing monies without prior permission of SEBI.
Provisions invoked
- s. 19
Parties
- JMP Securities Private Limited
Holding
SEBI modified the ad interim ex-parte order dated September 21, 2011 against JMP Securities Private Limited to allow it to sell securities held in its demat accounts, with sale proceeds to be deposited in a fixed deposit not withdrawable without SEBI's prior permission. The case against the entity remains pending completion of investigation.
Full text
Page 2 of 11 Limited, Maars Software International Ltd and K Sera Sera Limited and a revelation in the preliminary examination that certain Foreign Institutional Investors/ Sub- Accounts (hereinafter referred to as FIIs/ Sub-Accounts) namely, India Focus Cardinal Fund (India Focus), KII Limited (KII), Mavi Investment Fund (Mavi) and Sophia Growth (Sophia), were converting the Global Depository Receipts (hereinafter referred to as GDRs) underlying the shares of the aforesaid companies held by them into equity shares to sell in the Indian markets and that most cancellations happened within a short period of time of their issue and on noticing that a few entities were repeatedly appearing as counterparties to 33% to 75% of those shares sold by FIIs in the scrips, had conducted an examination into the same. The prima facie findings of the said examination pointed out to the various aspects of the GDR issues like the large size of the issue vis-à-vis the existing size of the issuing company, unimpressive financials of the company, common initial investors, high proportion of cancellation of GDRs repeatedly by a set of FII/Sub-Accounts, sale in Indian stock exchanges and a major portion being bought by a constant group of clients, the trading amongst the said clients and subsequent off-loading by them. The preliminary
Page 3 of 11 Sub-Accounts and amongst themselves were in violation of the provisions of the Securities and Exchange Board of India Act, 1992 and the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, as mentioned therein
Page 4 of 11 it had purchased only on four days and all its purchases were made only when the volumes were considerably high. It was observed in the Order that the counterparties to the trades of the FIIs were mostly the group entities and that Basmati, SV and the entity had together purchased 60% of the total shares sold by India Focus. . In respect of the trades in the shares of Avon Corporation Limited, it is seen that India Focus and KII had sold 1,23,58,611 and 17,00,000 shares, respectively in the securities market, of which 56.23% shares had been purchased by the members of the Group. The entity had not bought shares of the said company from any of the selling Sub-Accounts/FIIs. It was observed that subsequent to the purchase of shares by the other entities of the Group from the aforesaid Sub-Accounts, the Group entities were selling in the market and that the entities of the Group (including the entity) were trading amongst themselves. The entity had sold a total of 18,38,026 shares of Avon Corporation Limited of which 12,05,178 (approximately 66%) shares were purchased by four of the entities in the Group, namely, Alka, Basmati, Oudh, SV and the entity itself (in respect of 39,226 shares). The entity had submitted that it started trading in the shares of Avon Corporation Limited on July 3, 2008 i.e. prior to the investigation period, when the volume was substantially high and before the GDRs of the said company had come out in June 19, 2009. The entity also submitted
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Source: SecMarx — sebi:WTM/PS/ISD/15/MAY/2012. 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.