sebi:WTM/RKA/ISD/125/2014
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Facts / Headnote
Interim directions issued vide ad-interim ex-parte order dated June 5, 2014 confirmed; interim order neither vacated nor modified.
Provisions invoked
- s. 11
- s. 19
Regulations
- Reg. 2(1)(k)
Parties
- Factorial Master Fund
Holding
The WTM confirmed the ad-interim ex-parte order dated June 5, 2014 against Factorial Master Fund, finding that the noticee was prima facie in possession of unpublished price sensitive information (UPSI) regarding the impending OFS of LTFH when it built an aggressive short position, and that the interim directions were within SEBI's powers under sections 11 and 11B with natural justice having been observed.
Full text
Order in respect of Factorial Master Fund Page 2 of 8 Authority (AIR 1965 SC 458: 1963 Supp (2) SCR 373) and East India Commercial Company vs Collector of Customs (AIR 1962 SC 1893:(1963) 3, SCR). (b) The trades in question were based on high conviction, and fundamental and technical
Order in respect of Factorial Master Fund Page 3 of 8 was available to everyone because SEBI‟s seriousness to ensure compliance by listed companies, including LTFH, of MPS requirements was extensively covered in the press. (j) There is no trace of any reasonable evidence that the noticee was in possession of any unpublished price sensitive information in relation to the OFS as alleged or otherwise. During the market gauging exercise by Credit Suisse Securities (India) Private Limited („CS‟), the noticee had given its feedback to CS. Even CS has not stated that it mentioned any unpublished price sensitive information to the noticee. Further, CS did not undertake any “wall- crossing” exercise (the process of putting someone on notice that unpublished price sensitive information may be communicated and that one should not trade any more in those securities) when it corresponded with the noticee in the course of its market gauging exercise. This also points to the fact that there was nothing sensitive at all to convey regarding the scrip of LTFH. (k) The references to the likely floor price in the internal correspondence referred to in the
Order in respect of Factorial Master Fund Page 4 of 8 permitted under section 11 and 11B of the SEBI Act which empowers SEBI to pass appropriate order/direction in the interests of investors or securities market, pending investigation or inquiry or on completion of such investigation or inquiry. It is not always necessary to pass orders under those sections only after affording opportunity of personal hearing. Considering the facts and circumstances of a particular case, ad-interim ex-parte orders may be passed in the interests of investors or the securities market. This position has also been settled by various judgments such as the matter of Anand Rathi & Others Vs. SEBI (2002 (2) Bom CR 403, wherein the Hon'ble Bombay High Court has held as under:
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Source: SecMarx — sebi:WTM/RKA/ISD/125/2014. 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.