sebi:WTM/TCN/69/ISD/12/07
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Facts / Headnote
Interim prohibition on buying, selling or dealing in securities including IPOs continued till conclusion of enquiry proceedings and passing of final order
Provisions invoked
- s. 11B
- s. 11(4)
- s. 19
- s. 11
Regulations
- Reg. 3
Parties
- Shri Saumil Bhavnagari
Holding
The prohibition on Shri Saumil Bhavnagari from buying, selling or dealing in securities including IPOs shall continue till the conclusion of enquiry proceedings and passing of a final order. He may file written objections within 15 days.
Full text
Page 2 of 4 order dated 17.07.2006 (which was received by SEBI on September 28, 2006) summarily dismissed the appeal alongwith seven other connected appeals. Shri Saumil Bhavnagari thereafter filed Letters Patent Appeal before the Hon’ble Division Bench of the High Court of Gujarat. The Hon'ble Division Bench vide order dated December 12, 2006 directed Shri Saumil Bhavnagari to submit his reply to the impugned show cause notice within two weeks to SEBI and thereafter SEBI to pass a final order in the matter within three months. Accordingly, Shri Saumil Bhavnagari had filed his objections before SEBI. SEBI, after granting him a hearing and on careful consideration of the submissions and the documents submitted by him found that he acted as a conduit with financiers and confirmed the ex-parte order vide Order dated March 12, 2007.
Page 3 of 4 Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and provisions of SEBI (Disclosure and Investor Protection) Guidelines. The investigations revealed that Shri Saumil Bhavnagiri has acted as a conduit for Roopalben Panchal (who is the kingpin in cornering of shares through medium of thousands of benami and fictitious applicants) and other persons who ultimately received the shares cornered and aided and abetted Roopalben Panchal to execute the fraudulent game plan of cornering the shares and transferring to various persons including financiers like Sheelu Lalwani who was identified as financiers of key operators. The investigations also revealed that in the IPO of Suzlon Energy Shri Saumil Bhavnagiri received 1943 shares in lots of 16/31/32 shares from around 100 demat accounts before or on the date of listing which prima facie indicated his knowledge of modus operandi of cornering which is same as Roopalben Panchal. Shri Saumil Bhavnagiri made an illegal gain of Rs 12, 87,859 by disposing of the above 1943 shares. I have further observed that the shares cornered by Roopal were routed through Saumil to various entities, who finally sold these shares in the market who thereby made an actual gain of Rs 3.16 crore. Further, I have also noted from the details of off the floor transactions furnished by Saumil Bhavnagiri that there is a prima facie violation of Securities Contracts (Regulation) Act, 1956 with regard to provisions rel
Page 4 of 4 8. It is clarified that since this order is passed based upon prima facie findings, same shall not influence the proceedings pending before the Adjudicating Order or enquiry proceedings taken up under Section 11(4) and Section 11B of SEBI Act, 1992 vide the show cause notice dated December 13, 2007.
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Source: SecMarx — sebi:WTM/TCN/69/ISD/12/07. 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.