INVESTIGATIONS ENFORCEMENT AND SURVELLIANCE DEPARTMENT

Abnormal price rise accompanied with large volume was witnessed in the scrip of North Star Gems (India) Ltd. (NSGIL) on The Stock Exchange, Mumbai during March-June, 1996. The price of the scrip touched a high of Rs. 176/- at BSE and in the auction/close-out the price went up to Rs. 209/-. In view of these, an investigation was initiated by SEBI into the alleged price manipulation in the scrip of NSGIL. BSE suspended indefinitely the pending auctions in the scrip. In the meanwhile, pending investigations, the exchange was directed by SEBI to freeze the auction/close-out proceeds. 
Investigations revealed that Dr. Amit Shah in connivance with promoter of NSGIL, Dr. Piyush Mehta and with the assistance of other persons/entities, cornered majority of the floating stock of the scrip (more than 90%). Dr. Amit Shah also dealt in the scrip at BSE in substantial quantities with an intention to create an artificial market and manipulate the price in the scrip. As a result of investigations, enquiry proceedings have been initiated against the brokers involved. Pursuant to investigations and on the basis of prima facie involvement of Dr. Amit Shah and other associated persons and entities, show cause notices were issued to them. However, no one except Dr. Piyush Mehta responded to these show cause notices. Another opportunity to show cause was also given to these persons/entities in the form of personal hearing before the Chairman on December 4, 1998 and December 31, 1998. However, this opportunity was not availed. 
 
On careful consideration of all the records & other relevant material and findings of the investigations, these persons/entities were found guilty of creating artificial market and manipulation of the prices in the scrip of NSGIL, in violation of the provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 read with the SEBI Act. Chairman, SEBI has issued the following directions under Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market)Regulations, 1995 read with Section 11 B of the SEBI Act: 
 
a. Dr. Amit Shah and Shri Dipak Dalal have been prohibited from dealing in securities including NSGIL and accessing capital market for a period of five years. They were also found involved earlier in price manipulation of scrips of Dhanalaxmi Lease & Finance Ltd. and Kamakshi Housing Ltd. respectively and they have been debarred from dealing in securities for a period of three years and two years. This prohibition for five years will run concurrently with the earlier directions. 
 
b. Dr. Piyush Mehta has been prohibited from dealing in securities including NSGIL and accessing capital market for public subscription for a period of three years. 
 
c. Shri Mihir Ghelani has been prohibited from dealing in securities for a period of five years. He was also found involved earlier in price manipulation of scrip of Kamakshi Housing Ltd. and has been debarred from dealing in securities for a period of three years. This prohibition of five years will run concurrently with the earlier directions. 
 
d. M/s. Yashswi Engg. Pvt. Ltd. & its directors namely, Dhamistha K. Panchal, Meena N. Panchal, Raju Panchal and Prakash P. Bhat and M/s. Ekta Ceramics Ltd. & its directors namely, Rajendra V. Panchal, Sailesh Bhatt & Nilesh N. Barot have been prohibited from dealing in securities for a period of three years. 
 
e. Shri Girish Shah has been prohibited from dealing in securities for a period of three years. 
 
f. Shri Gaurav Shah, Ms. Alka Shah and Shri Dharmendra Barot have been prohibited from dealing in securities for a period of two years. 
 
The aforesaid orders would come into force with immediate effect.