sebi:WTM/RKA/ISD/162/2014
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Facts / Headnote
Ad interim ex-parte order restraining the noticees from dealing in securities of First Financial Services Ltd pending investigation; noticees given 21 days to file objections and seek personal hearing.
Provisions invoked
- s. 11B
- s. 11
- s. 19
- s. 11(1)
- s. 12A
- s. 81
Regulations
- Reg. 3
- Reg. 2(1)(c)
- Reg. 3(a)
Holding
The WTM prima facie found that First Financial Services Ltd, its promoters/directors, preferential allottees, and connected First Financial group entities engaged in fraudulent, manipulative and unfair trade practices by artificially inflating the price and volume of the scrip to provide a profitable exit to preferential allottees, and passed an ad interim ex-parte order restraining them from dealing in securities pending investigation.
Full text
Order in the matter of First Financial Services Ltd Page 2 of 29 3. First Financial had a share capital of ₹ 37,47,600 comprising 3,74,760 equity shares of ₹10/- each as on September 30, 2011. On December 08, 2011, First Financial made a preferential allotment of 54,50,000 equity shares at the price of ₹ 20/- per share (hereinafter referred to as the "1st preferential allotment"). Thereafter on April 28, 2012, it made another preferential allotment of 24,50,000 equity shares at the price of ₹ 20/- per share (hereinafter referred to as the "2nd preferential allotment"). Thus, in total, First Financial allotted 77,00,000 equity shares to 83 persons/entities. The equity shares allotted on preferential basis to aforesaid allottees were locked-in for a period of one year i.e. up to December 07, 2012 and April 27, 2013 respectively in the instant case in terms of Securities and Exchange Board of India (Issue of Capital And Disclosure Requirements) Regulations,
Order in the matter of First Financial Services Ltd Page 3 of 29 directors/promoters and the issue of these shares was under a prior arrangement between them.
Order in the matter of First Financial Services Ltd Page 4 of 29 primarily involved in pushing the price up during Patch-1 (when the shares allotted in preferential allotments were under lock-in) by contributing to positive LTP through first trades with negligible order quantity, the other group of entities was acting as buyers in Patch-2 in order to provide exit to preferential allottees and in the process creating artificial volume. The role of these two groups is discussed in subsequent paragraphs.
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Source: SecMarx — sebi:WTM/RKA/ISD/162/2014. 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.