sebi:WTM/TCN/81/ID6/02/2008
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Facts / Headnote
Noticee held liable for violating SEBI Circular RMB GI Series Circular No.(92-93) dated 01-03-1993, thereby contravening Clauses 1, 2 and 9 of the Code of Conduct for Merchant Bankers read with Regulation 13 of the SEBI (Merchant Bankers) Regulations, 1992; restrained from accessing the securities market for a period of one (1) month with immediate effect.
Provisions invoked
- s. 11
- s. 19
- s. 69
Regulations
- Reg. 13
Parties
- M/s. Libord Finance Limited (now known as M/s. Libord Infotech Ltd.)
Holding
The noticee, M/s. Libord Finance Limited (now Libord Infotech Ltd.), was held liable for non-exercising due care and diligence as Lead Manager by failing to coordinate with the Registrar to the issue, in violation of SEBI Circular RMB GI Series Circular No.(92-93) dated 01-03-1993, Clauses 1, 2 and 9 of the Code of Conduct for Merchant Bankers, and Regulation 13 of the SEBI (Merchant Bankers) Regulations, 1992. The noticee was restrained from accessing the securities market for one month.
Full text
Page 2 of 8 34, 56, 400 shares. The issue had opened on 06-03-1996 and closed on 16-03-1996. After the closure of the issue, the shares were allotted to the applicants. The shares were listed in Bombay Stock Exchange Limited (herein after referred to as ‘BSE’) with effect from May 29, 1996 and opened at Rs.15/- to Rs.16/-. During the period from 25-05-1996 to 07-06- 1996 the prices and volumes of the scrip started to rise. In the subsequent settlements, the prices and volumes continued to rise with the price having soared from Rs.8.50/- on 06-06-1996 to Rs.112.50/- on 30-08-1996. The stock exchange suspended the trading in the shares suspecting that the trades were aimed at rigging the price of the scrip. In view of this suspicion, the exchange conducted a preliminary investigation. The said investigations alleged that the price of the scrip was rigged by a set of stock brokers and their clients in a very short span of time. The matter was independently investigated by the Securities and Exchange Board of India (herein after referred to as ‘SEBI’) to look into the possible violations of the provisions of the SEBI Act, the Rules, Regulations and the Circulars made thereunder.
Page 3 of 8 allotment and will also pay interest from the date of application, for the amount so financed. The investigations further revealed that there was an implicit understanding between the promoters of the company and the financiers (who applied for subscription only with the object of bailing out the issue) and in implementation of the understanding, the company purchased the shares back from the entities who purchased the shares only to give a false impression of proper subscription of the issue. There are many other connected facts related to whole episode of the subscription of the public issue but all would not be relevant to this case.
Page 4 of 8 were also allotted to two different persons. The noticee was primarily alleged of not coordinating with the Registrar to monitor the flow and processing of the applications. Thus, the noticee had not complied with the directive of SEBI made vide SEBI Circular RMB GI Series Circular No. (92-93) dated 01-03-1993 that directs the lead manager to co-ordinate with the Registrar during the public issue thereby violating Clauses 1, 2 and 9 of the Code of Conduct prescribed for Merchant Bankers and Regulation 13 of the SEBI (Merchant Bankers) Regulations, 1992. In view of the aforesaid allegations, it was decided to conduct an enquiry under the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing of Penalty) Regulations, 2002 in order to enquire and adjudge the alleged contraventions of the noticee.
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Source: SecMarx — sebi:WTM/TCN/81/ID6/02/2008. 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.