sebi:WTM/TCN/153/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

Ask Holdings Private Limited restrained from accessing the securities market and prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, whether directly or indirectly, for a period of three months, with immediate effect.

Provisions invoked

• s. 19
• s. 11

Regulations

• Reg. 11
• Reg. 4
• Reg. 199

Parties

• Ask Holdings Private Limited (PAN NO. AABCA5572B)

Holding

Ask Holdings Private Limited was found to have violated Regulation 4(a), (b), (c) and (d) of the SEBI (PFUTP) Regulations, 1995 by engaging in structured, non-genuine trades in the scrip of Granules India Ltd. (GIL) to create artificial liquidity and a false appearance of trading, and was restrained from accessing the securities market for three months.

Full text

2 2. Investigation inter alia revealed that GIL had allotted 14,02,524 shares on May 24, 2002 and 10,51,894 shares on June 14, 2002 aggregating to 24,54,418 shares at the rate of Rs.14.26 on preferential basis to the promoter and Managing Director of GIL, Shri C. Krishna Prasad (hereinafter referred to as “Shri Prasad”). GIL was listed at BSE on December 19, 2002 and on the same day there was commencement in trading in the shares of GIL. In the initial days of listing there was hardly any interest in the scrip. It was noted in the investigation report that Shri Prasad wanted to sell his existing holding in the company. Therefore, liquidity was required to be brought in to facilitate the off loading of shares by Shri Prasad. Shri Prasad approached Shri C P Khandelwal of M/s. Southern Shares & Stocks Ltd. (Southern Shares), member of BSE to offload the shares at BSE who in turn approached Shri Arun Kumar Dalmia (Shri Dalmia), who assured that he would arrange the buyers for the shares when they are offloaded by Shri Prasad. It was alleged that Ask Holdings Pvt. Ltd. (hereinafter referred to as “Ask Holdings”) along with other clients in the scrip who were known to each other had executed the mandate given by Shri Dalmia and created artificial liquidity and interest in the scrip in violation of provisions of Regulation 4 (a) (b) (c) and (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (hereinafter referred to

3 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 Ask Holdings asking it to show cause as to why suitable

4 investigation period, the scrip was traded on 25 days and on 15 days the total traded quantity of shares was more than 1 lakh shares. During the same period, BSE sensex fell from 3,333 to 3,250. Thus, I find that the movement in the price and volume of the scrip was neither in tandem with the general market sentiments nor with any announcements from the company which might have generated such an interest in scrip.

Source: SecMarx — sebi:WTM/TCN/153/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.