June 05, 2009
PR No. 182/2009

Interim Order against 26 entities in the matter of repeated dealings by connected clients

Securities and Exchange Board of India (SEBI) in the course of its routine market surveillance, received information regarding the execution of synchronized deals in certain scrips by entities namely, Maruti Securities Limited (MSL), Kundan Leasing and Finance Private Limited (KLFPL), Chandra Financial Services Private Limited (CFSPL), Jay Investrade Private Limited (JIPL) and HSM Financial Services Private Limited (HSM). The information received by SEBI indicated that the said entities had executed synchronized deals in five scrips namely Cals Refineries Limited (Cals), Confidence Petroleum India Limited (Confidence), Bang Overseas Limited (Bang), Shree Precoated Steels Limited (now known as Ajmera Realty & Infra India Limited) (SPSL) and Temptation Foods Limited (TFL).

Examination of dealings by connected clients, prima facie shows that:

a) The connected clients had large trading concentration in terms of trading volume on BSE in the scrips of Cals, Confidence, Bang, SPSL and TFL during the relevant period.

b) The connected clients had dealt amongst themselves on market i.e. they were buying and selling shares amongst each other thereby creating market trading volume.

c) Some of the inter se trades of connected clients were synchronized in nature.

d) Further, connected clients were found to be transferring shares amongst themselves through off-market transactions. Thus, it appears that they were executing synchronized deals and off market deals amongst themselves simultaneously.

e) In certain instances, it is seen that the delivery obligations of one connected client was fulfilled by off-market borrowing of shares from another connected client and subsequently the borrower bought back the shares from the market and returned the same to the lender through off-market transfer.

The above acts of connected clients are prima facie of such nature that it had caused increased market traded volume and such increased traded volume would have induced other genuine investors to deal in securities. Thus, prima facie, the acts of connected clients, are in violation of Section 12A(c) of the Securities and Exchange Board of India Act, 1992 read with Regulations 3(a) and 4(1) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

SEBI observed that atleast five of the connected clients appear to be related to Mr. Shirish Maniar, who was implicated by CBI along with Mr. Ketan Parekh in the Madhavpura Mercantile Co-operative Bank case. Mr. Ketan Parekh along with the companies belonging to him is already debarred by SEBI from dealing in securities market. Therefore, it appears that he has conveniently used the connected clients at will as his front entities for executing trades desired by him in the securities market. This is possible because the connected clients, so far, can trade without any restraint as there is no debarment whatsoever by SEBI in their dealing in the securities market, as is being faced by Mr. Ketan Parekh and his group of companies. Further, the flow of funds originating from Mr. Ketan Parekh which were routed through the connected clients, when juxtaposed with securities market transactions of connected clients, as brought out by the instant SEBI examinations, leads to the possibility that the securities market transactions of the connected clients were executed as a part of a larger device for creating additional layers to obfuscate the funds trail and also to integrate the money originating from Mr. Ketan Parekh into the banking system.

Dr. K.M.Abraham, Whole Time Member, SEBI vide interim order dated June 4, 2009 has restrained the following persons/entities from accessing the securities market and further prohibited them from buying, selling or dealing in securities market, directly or indirectly, till further orders:

Mumbai 

June 05, 2009

For full copy of order against ACME CRAFT PVT.LTD., click here.

For full copy of order against ALOSHA VANIJYA PVT.LTD., click here.

For full copy of order against AMAR PACKAGINGS PVT.LTD., click here.

For full copy of order against ASHOK KUMAR JAIN, click here.

For full copy of order against BEEJAY INVESTMENT & FINANCIAL CONSULTANTS PVT.LTD., click here.

For full copy of order against CHANDRA FINANCIAL SERVICES PVT.LTD., click here.

For full copy of order against CHIMMING TRADING CO.LTD., click here.

For full copy of order against EVERSIGHT TRADECOMM PVT.LTD., click here.

For full copy of order against HARSH SHIRISH MANIAR, click here.

For full copy of order against HSM FINANCIAL SERVICES PVT.LTD., click here.

For full copy of order against JAY INVESTRADE PVT.LTD., click here.

For full copy of order against JAY SHIRISH MANIAR, click here.

For full copy of order against KUNDAN LEASING & FINVEST PVT.LTD., click here.

For full copy of order against MARUTI SECURITIES LTD., click here.

For full copy of order against PEANANCE COMMERCIAL PVT.LTD., click here.

For full copy of order against RAJENDRA KUMAR AGARWAL, click here.

For full copy of order against RAKHI TRADING PVT.LTD., click here.

For full copy of order against RAVIKANT CHOWDHARY, click here.

For full copy of order against SAMATA JAIN, click here.

For full copy of order against SHANTI FINANCIAL SERVICES PVT.LTD., click here.

For full copy of order against SHYAM SUNDAR SHAH, click here.

For full copy of order against STUPENDORS TRADERS PVT.LTD., click here.

For full copy of order against SUDHIR JAIN, click here.

For full copy of order against SURABHI JAIN, click here.

For full copy of order against V.S.B.INVESTMENTS PVT.LTD., click here.

For full copy of order against VENTURE BUSINESS ADVISORS PVT.LTD., click here.