sebi:WTM/TCN/ID7/32/AUG/2008
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Facts / Headnote
Proceedings disposed of with a direction to the noticees to be careful in their future dealings in securities and adhere strictly to the statutory requirements; no market restraint order passed.
Provisions invoked
- s. 11
- s. 11(4)
- s. 19
Regulations
- Reg. 4
- Reg. 4(a)
Parties
- Mr. Omprakash (HUF)
- Ms. Raksha Devi
- M/s. Asiatic Engineers Private Limited
- M/s. Technocrat Marketing Private Limited
- Mr. Harish Kumar
Holding
The Whole Time Member held that the noticees (promoter group of EKL) were not established to have directly aided and abetted market manipulation by the three related clients, and therefore no directions restraining them from accessing the securities market were required; the proceedings were disposed of with a direction to be careful in future dealings.
Full text
Page 2 of 14 Mr. Omprakash (HUF), Ms. Raksha Devi, M/s. Asiatic Engineers Private Limited, M/s. Technocrat Marketing Private Limited and Mr. Harish Kumar, Director, all promoters in M/s. Electrolux Kelvinator Limited (hereinafter referred to as ‘EKL’ or the ‘company’) having address at 13/11, East Patel Nagar, New Delhi -
Page 3 of 14 the market as stated by Mr. Harish Kumar in his statement recorded on November 11, 2002. M/s Mefcom, vide its letter dated November 21, 2002, has stated that it had purchased only 15 lakhs shares of M/s EKL from Mr. Harish Kumar and Associates and not 35 lakhs as affirmed by Mr. Harish Kumar. M/s Mefcom has further stated that they sold 10 lakhs of these cum-rights shares to M/s Ankur Finlease Pvt Ltd., Delhi and retained the balance 5 lakhs shares with them. Part of these shares ( approx. 6 lakhs shares) were sold by M/s Ankur Finlease to the three related clients – M/s Vivenasri Financial Services Ltd. (M/s VFSL), M/s Harsh Pranav Securities Pvt. Ltd. (M/s HPSPL) and M/s New Fin Financial Services Pvt Ltd. (M/s NFFSPL), with the funding for these purchases coming from M/s Shalibhadra Securities Limited – a defaulting member of NSE . Acquisition for a further 20 lakhs cum-rights shares was made from M/s Harish Kumar & Associates with the funding for the same coming from M/s Shalibhadra Securities Ltd. (vide pay order nos. 174180 to 174185 dated 24.12.1999). After getting these shares transferred in their name, application for rights was made. Therefore, after rights, these three clients alongwith M/s Shalibhadra Securities Ltd. had approx. 45 lakhs shares of M/s EKL. Part of the source of funds for making the purchases as well as for applying for the rights was received from M/s Shalibhadra Securities Ltd. – a defaulting broker of NSE. These three related client
Page 4 of 14 them. These related clients would immediately receive the money from the custodians, under the “Sell and Cash scheme” of the custodians. The custodians in turn would receive the money on settlement of the trades. More often than not, the purchases for these sales were being made by one of the three related clients, particularly through M/s Shalibhadra Securities Ltd. The money received from the custodians, for the sales made during one settlement, was being used to meet the pay-in obligations arising out of their net purchases made during the previous settlement.
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Source: SecMarx — sebi:WTM/TCN/ID7/32/AUG/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.