sebi:WTM/SR/ISD/23/09/2013
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Facts / Headnote
SCN dated August 28, 2013 disposed without further directions; restraint imposed vide Interim Order dated September 21, 2011 and Confirmatory Order dated January 25, 2012 vacated with immediate effect.
Provisions invoked
- s. 19
Regulations
- Reg. 11
Parties
- Mavi Investment Fund Limited
Holding
The charges against Mavi Investment Fund Limited in the SCN dated August 28, 2013 were not decisively established, so the SCN was disposed of without further directions and the Interim and Confirmatory restraints were vacated with immediate effect.
Full text
Page 2 of 17 4. The primary observations made in the Interim Order are: a. Issuer Companies were having unimpressive financials yet they were able to successfully issue GDRs in much larger quantities than their existing equity capital. The lead manager in all the cases was Pan Asia. b. The initial investors in all the GDR issues of Issuer Companies were common set of foreign entities. The addresses of these entities prima facie appeared to be non-existent. c. A group of Sub-Accounts with prima facie connections with AP were observed to be converting GDRs of Issuer Companies and selling it in India within a short period of issuance of GDRs. d. The sale of shares of Issuer Companies by Sub-Accounts was matching on a consistent basis with certain Indian entities which were also connected to AP. e. During the aforesaid preliminary examination alongwith certain other FIIs/sub-accounts, it was prima-facie observed that M/s Mavi Investment Fund Limited (hereinafter referred to as "Mavi"), was converting the GDRs held by it in one of the Issuer Companies viz. Maars Software International Limited (hereinafter referred to as "Maars") into underlying shares to sell in the Indian markets. f. It was observed that around 96.1 % of shares of Maars sold by Mavi were purchased by three Indian clients connected to AP, viz. Basmati Securities Private Limited, Alka India Limited and SV Enterprises (hereinafter referred to as "CP Group"). From the preliminary examination, it prima facie appeared
Page 3 of 17 6. As stated earlier in Para 4(f), Mavi was observed to have traded with counterparties connected with AP in Maars. It was observed in the Interim Order that for certain trades , the buy and sell orders were placed at exactly or nearly same price and the that the buy and sell order size was also nearly same in four trades (Details given in paragraph 22.1(ii) of this Order).
Page 4 of 17 except for the scrips of the Issuer Companies and Cals Refineries Limited, which were under investigation. 11. Mavi filed an appeal (Appeal No. 63 of 2013), before the Hon’ble SAT against the Interim Order and Confirmatory Order issued by SEBI. The aforesaid appeal was disposed of by the Hon’ble SAT vide its Order dated July 17, 2013, wherein it observed:
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Source: SecMarx — sebi:WTM/SR/ISD/23/09/2013. 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.