sebi:WTM/VKC/ID-7/113/2007
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Facts / Headnote
Noticees restrained from accessing the securities market and prohibited from buying, selling or dealing in securities in any manner whatsoever for a period of six months for violation of Regulation 3 of PFUTP Regulations, 1995
Provisions invoked
- s. 11B
Regulations
- Reg. 11
- Reg. 2(c)
- Reg. 3
Holding
The Noticees executed fraudulent synchronized trades in the illiquid scrip of Alang Industrial Gases Ltd. on 16.03.2001 in violation of Regulation 3 of PFUTP Regulations, 1995, and were accordingly restrained from accessing the securities market and dealing in securities for six months.
Full text
Page 2 of 34 1.1 M/s. Alang Industrial Gases Ltd. (hereinafter referred to as “AIGL”) was incorporated on 31.03.1995 and obtained the Certificate of Commencement of Business on 04.04.1995. The main object of AIGL was to carry on the business of manufacturing various types of industrial gases. With a view to diversify the existing line of business, in 1996, AIGL proposed to set up an oxygen manufacturing plant of 200 CMH Capacity. For this purpose, in the same year AIGL came out with a public issue. The Company AIGL had a paid up capital of Rs. 5.4 crores comprising of 54,00,700 shares of Rs. 10/- each and its share holding pattern is given hereunder:
Page 3 of 34 compared to the other two days. 1.5 On receipt of BSE investigation report, Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted investigations which revealed that on 16.03.2001 Shyam Investments, Uttam Investments, Loko Securities, Rupani Enterprises and Jatin J. Shah were the sellers while Comet Investments Pvt. Ltd., Addvalue Financial Services Pvt. Ltd., Meeta A. Gala, Mitesh V. Shah, Dharmen J. Sheth, Rohit Gandhi, Caplon Securities & Investments Pvt. Ltd. were the buyers. Further it was found that the shares were transferred to these persons/entities by Rajesh Shah and his associate Falgun C Shah through Yatin B Shah and all these person/entities (hereinafter referred to as “Noticees”) had transacted in AIGL in fraudulent manner. It was further found that prior to 16.03.2001, none of these selling clients were holding any shares of AIGL. When asked to explain these selling without having shares, they argued that they had dealt in the AIGL on behalf of Shri Yatin B. Shah who, in turn, claimed to have acted on behalf of Shri Rajesh Shah. Since all the selling and buying clients were arranged by Shri Yatin B. Shah, it was inferred that the sellers were aware of the identity of the ultimate buyers and of the arrangement with the ultimate buyers. The transactions executed by these persons were in contravention of Regulation 3 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relati
Page 4 of 34 at all acted in concert with Shree Ganesh Enterprises or their partners or their clients. He further stated that the alleged transactions were having three parts viz. acquisition of shares by Shri Rajesh Shah from Shri Dilip Sheth, the sale of shares by Shri Rajesh Shah and the acquisition of shares by Shree Ganesh Enterprises and their clients. Shri Yatin Shah though admitted that he helped Shri Rajesh Shah to sell the shares but he denied his role in the third part of the transactions. He further stated that Shri Rajesh Shah, who is his friend, approached him to sell large quantity of AIGL shares and in turn introduced to Shri Rakesh Shah and Shri Anil Shah, partners of Shree Ganesh Enterprises, who reside in the same building where he was staying, had agreed to arrange buyers and sellers for the transactions for which he extended all his assistance. Shri Yatin Shah also submitted that negotiated deals are permitted by SEBI as per SEBI circular no. SMDRP/POLICY/CIR-32/99 dated 14.09.1999.
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Source: SecMarx — sebi:WTM/VKC/ID-7/113/2007. 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.