sebi:WTM/TCN/152/IVD3/Jan/09

SEBI · SEBI · 2007-03-29 · Dr. T.C. Nair, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Shri C. Krishna Prasad restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities for a period of one month with immediate effect

Provisions invoked

• s. 11
• s. 11(4)
• s. 19

Regulations

• Reg. 11
• Reg. 3
• Reg. 4

Parties

• Shri C. Krishna Prasad

Holding

Shri C. Krishna Prasad, Managing Director of Granules India Ltd., was held to have created a false and misleading appearance of trading in violation of Regulation 4(a) & (b) of the PFUTP Regulations, 1995, and was restrained from accessing the securities market and prohibited from buying, selling or dealing in securities for one month.

Full text

2 Granules India Ltd. (hereinafter referred to as “GIL”). The shares of GIL were listed on the Bombay Stock Exchange Limited (BSE), Hyderabad Stock Exchange (HSE), Madras Stock Exchange Ltd. (MSE).

3 3. In view of the aforesaid findings of investigation, a show cause notice dated March 29, 2007 was issued under section 11 and section 11(4) of SEBI Act, 1992 read with Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”) to Shri Prasad, asking him to show cause as to why suitable directions including directions restraining him from buying, selling or dealing in securities market for a specified period should not be issued against him.

4 iv. As far as the manner of selling of shares was concerned, it was upto the broker, who had assured him that it would sell the shares in accordance with the provisions of law. The broker had sold 15,00,000 shares held by him during the period December 20, 2002 to May 2003. v. He had no link with any persons or entities who had traded in the scrip of GIL during the investigation period. As a result of sale of shares he had made gains, hence the preferential allotment cannot be questioned. vi. He had no role in price movement of scrip and had already transferred shares to the account of the broker with a mandate to sell the shares and thereafter it had sold the shares in the market. He was not aware as to how and who the parties were to whom the shares were sold during the investigation period. vii. Though he had approached the broker to sell his shares, he was unaware about the modus operandi followed by the broker to sell his shares. He was also not aware that for carrying out this sale transaction, the broker had approached Shri Arun Kumar Dalmia. viii. He had no link./relationship/nexus with Shri Arun Kumar Dalmia or his related entities viz., Satya Securities Ltd, Basant Marketing Pvt Ltd, Pacific Corporation, ADD Investment & Phulchand Sons Investments Pvt Ltd,. Mr. Deepak Dalal, ASK Holding Pvt Ltd. ix. In the instant case, he had sold the shares with the objective of pumping it back in the company. Since the shares were sold through SEBI registered broker, transparen

Source: SecMarx — sebi:WTM/TCN/152/IVD3/Jan/09. 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.