April 26, 2007
PR No. 149/2007
Order in the matter of order book manipulation by certain entities on the day of listing of securities on the stock exchanges
Shri G. Anantharaman, Whole Time Member, SEBI, has passed an order dated April 26, 2007 under in the matter of order book manipulation directing that:
a. that the identified entities viz. Latesh Chheda, Viren Kenia, Bhavin Chheda, Chetan Rathod, Neptune Fincot P Ltd, Dhiren Pajwani and R SS Investment Ltd shall hereby cease and desist from dealing in shares in the manner described in the order as would impart artificiality to the order book with the concomitant impact on the market in violation of Regulation 4 (2) (a) (b) & (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003
b. that the identified entities viz. Latesh Chheda, Viren Kenia, Bhavin Chheda, Chetan Rathod, Neptune Fincot P Ltd, Dhiren Pajwani and R SS Investment Ltd are hereby directed not to buy, sell or deal in securities, directly or indirectly, on the day of listing of any securities on the stock exchanges, till further directions in this regard.
c. The brokers viz., R SS Investments, Maniput Investments Pvt Ltd, Magnum Equity Broking Ltd. and Prashant Jayantilal Patel through whom these identified entities have dealt in the shares of the companies in the manner described above are directed to be cautious and exercise due diligence while dealing on behalf of their clients.
Based on the alerts received from the Integrated Market Surveillance System (IMSS) of SEBI, preliminary analysis was made in the dealings of shares of following companies on their first day of listing:
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Pochiraju Industries Ltd
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Cambridge Technology Enterprise Ltd
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Mindtree Consulting Ltd
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Shree Astavinayak Cine Vision Ltd
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Pyramid Saimita Theatre ltd
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AI Champdany Industries Ltd
It was observed that certain entities had placed abnormally large orders of shares at prices much below prevailing market prices and unusually, also revealed their large order quantities in full. The analysis of the order placed by the above mentioned identified entities prima facie indicate that:
a) The orders were placed much below the prevailing market price on the day of listing of the shares of the companies, thereby rendering them as frivolous or non-serious orders making no commercial sense. The intention of placing such orders was therefore not for genuine trading but only for artificially enhancing the levels of demand, which constitutes a manipulative practice in the market.
b) The entire large order quantity was revealed to the market in one stroke, which is an uncommon practice in the market. A genuine buyer of large quantity of shares would not like to disclose the entire quantity of intended purchase as it would normally impact the price and thereby increase his financial burden by way of higher cost of acquisition. Therefore, it is prima facie seen that such conduct on the part of identified entities might not be consistent with anything other than market manipulation.
c) The likely financial exposure that such large orders would have entailed in the event of execution, which was liable to be borne by the identified entities, is disproportionate to the annual income disclosed by these entities in the KYC forms submitted to their respective brokers. Their trading history over the preceding six months suggests that these entities had not executed any trade remotely close to the large numbers under scrutiny. Therefore it may be prima facie inferred that these identified entities never had any intention to execute such large orders.
d) The likely possible purpose of placing such large orders seems to be one of providing artificial depth to the order book thereby seeking to subserve their own interest in the market besides misleading the lay investors. By indulging in such acts, these entities appear to have created false or misleading appearance of trading in securities market and in the process appear to have violated Regulations 4 (2) (a) (b) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003.
Mumbai
April 26, 2007
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For full copy of order against BHAVIN S.CHHEDA, click here.
For full copy of order against CHETAN B.RATHOD, click here.
For full copy of order against DHIREN N.PAJWANI, click here.
For full copy of order against LATESH M.CHHEDA, click here.
For full copy of order against MAGNUM EQUITY BROKING LTD., click here.
For full copy of order against MANIPUT INVESTMENTS PVT.LTD., click here.
For full copy of order against NEPTUNE FINCOT PVT.LTD., click here.
For full copy of order against PRASHANT JAYANTILAL PATEL, click here.
For full copy of order against PRASHANT JAYANTILAL PATEL,M/S, click here.
For full copy of order against RSS INVESTMENTS PVT.LTD., click here.
For full copy of order against RSS INVESTMENTS PVT.LTD., click here.
For full copy of order against VIREN KENIA, click here.
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