sebi:WTMO/10/MIRSD/10/03

SEBI · SEBI · 2002-02-15 · T M Nagaraja, 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

Penalty imposed: suspension of Certificate of Registration of Dooger and Associates Ltd. as a Merchant Banker for a period of one month

Regulations

• Reg. 13
• Reg. 15
• Reg. 10
• Reg. 11
• Reg. 12
• Reg. 15(1)
• Reg. 199
• Reg. 13(1)(a)
• Reg. 24
• Reg. 24(2)

Parties

• Dooger and Associates Ltd. (DAL)

Holding

DAL, acting as merchant banker, failed to exercise due care and diligence and contravened Regulations 24(2), 24(4) and 24(5) of the SEBI (SAST) Regulations, 1997 read with Clauses 2 and 9 of the Code of Conduct under Schedule III of Regulation 13 of SEBI (Merchant Bankers) Regulations, 1992, by failing to ensure the public announcement was published in all editions of the required newspapers. A minor penalty of suspension of DAL's Certificate of Registration as a Merchant Banker for one month was imposed.

Full text

submitted a copy of letter dated May 21, 2002 written by the Advertising Agency to them inter alia stating that due to communication error on the Advertising Agency’s part the Advertising Agency could not publish the advertisement in all the editions of Asian Age and Nav Bharat. 1.5     On perusal of the reply of DAL, it prima facie appeared that it had contravened the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and SEBI (Merchant Bankers) Rules and Regulations, 1992

4.0    REPLY AND HEARING 4.1     DAL in its reply dated August 19, 2003 made following submissions : A. “the mistake of non-publication of public announcement was not deliberate but a genuine error on part of the advertising agency, M/s. Insight Advertising Services”. Further “we do not agree with Mr. S.V. Krishna Mohan (Adjudications and Enquiry Officer) that we the merchant banker can not abdicated our responsibility by shifting blame to the Advertising Agency, M/s. Insight Advertising Services, who released the public announcement for the open offer as stated herein above”. Further “.. the way Advertising Agencies function in India, it would not have been be possible for us to control any of the events or activities being carried out by them They are neither registered with the capital markets regulatory body nor answerable to them. We have to re-iterate that, we had furnished a copy of our written communication to the Advertising Agency M/s. Insight Advertising Services vide our letter dated 15-02-2002, which was duly acknowledged by them.” Further” What we have stated on page no. 5, para 2.2.1 of the Letter of Offer dated 30/03/2002 was based on our understanding that the aforesaid Advertising Agency had published the public announcement as per our written instruction dated 15-02-2002, as there was nothing contrary to the same either informed by them or otherwise” Further” we have acted diligently within our means and resources, i.e. by issuing a written instruction to t

C.       “ the target company was incorporated in December 1942 in Lahore (now in Pakistan). The shareholders base has been wide spread and some of the shareholder are either deceased or their successors might not have been aware of their shareholding in the target company. Inspite of the such deficiency, the acquirers have been able to receive response of 1.34 times the open offer size, which you may please appreciate.”

Source: SecMarx — sebi:WTMO/10/MIRSD/10/03. 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.