sebi:WTM/RKA/ISD/09/2015

SEBI · SEBI · 2013-09-30 · Rajeev Kumar Agarwal, Whole Time Member

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Facts / Headnote

Restrained the named persons/entities from accessing the securities market and buying, selling or dealing in securities, either directly or indirectly, till further directions, pending inquiry/investigation and passing of final order.

Provisions invoked

• s. 19
• s. 12A
• s. 81

Regulations

• Reg. 3
• Reg. 2(1)(c)
• Reg. 3(a)

Holding

SEBI prima facie found a manipulated price-rise and misuse of preferential allotments to generate fictitious long-term capital gains and, as an interim preventive measure, restrained KFCL, Kamalakshi group, suspected entities and allottees from the securities market pending investigation.

Full text

Order in the matter of Kamalakshi Finance Corporation Ltd Page 2 of 37 3. As on September 30, 2013, KFCL had a share capital of ₹5,00,000 comprising 50,000 equity shares of ₹10/- each. On November 09, 2013, KFCL made a preferential allotment of 82,90,000 equity shares on preferential basis to 42 entities at the price of ₹12/- per share (hereinafter referred to as the "1st preferential allotment"). Thereafter, on February 17, 2014, it made another preferential allotment of 1,48,50,000 equity shares to 49 entities at the price of ₹13/- per share (hereinafter referred to as the "2nd preferential allotment"). On June 24, 2014, it made another preferential allotment of 52,00,000 equity shares to 46 entities at the price of ₹25/- per share (hereinafter referred to as the "3rd preferential allotment"). Thus, in total, KFCL allotted 2,83,40,000 equity shares to 137 persons/entities. The details of the 137 preferential allottees in the aforesaid 3 allotments are provided in Annexure A. Consequent to these actions, in a span of less than one year, the paid up share capital of KFCL increased to ₹2,83,900,000 comprising 2,83,90,000 shares (i.e. an increase of 2,83,40,000 shares) as on June 30, 2014. The equity shares allotted on preferential basis to aforesaid allottees during the first 2 allotments were locked-in for a period of one year i.e. up to December 08, 2014 and March 20, 2015 respectively in accordance with the provisions of SEBI (Issue of Capital and Disclosure Requirements) R

Order in the matter of Kamalakshi Finance Corporation Ltd Page 3 of 37 the preferential allotments, trading in the scrip of KFCL occurred rarely, the increase in the price during the period after the 1st preferential allotment with a very low average daily volume was found to be substantial and abnormal. In light of the above, in order to observe the price volume behaviour of the scrip, the trading in the scrip was analysed in two patches with a focus on the following:-  The trading frequency;  The volume generated;  Contribution to price rise;  Buying behaviour as observed from Last Traded Price ("LTP") data

Order in the matter of Kamalakshi Finance Corporation Ltd Page 4 of 37 Table I: Particulars of Kamalakshi group & suspected entities and the basis of connection.

Source: SecMarx — sebi:WTM/RKA/ISD/09/2015. 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.