Securities and Exchange Board of India (SEBI): G. Mahalingam, Whole Time Member, while exercising the powers under Sections 11(1), 11(4) and Section 11B of the SEBI Act, gave directions restricting the Noticees from accessing the securities market for fraudulently manipulating of the price of the scrip with connected entities.
In the present matter, pursuant to investigation by SEBI, it was alleged following the allotment of shares under the Scheme of Amalgamation, Noticee nos. 1–6 i.e. Sunrise Asian and its Directors, had devised an arrangement whereby 83 connected entities had manipulated the price of the scrip in four patches of trading during the Investigation period. Out of which, 77 entities were counterparties to the sale of shares by 1059 entities at the manipulated price. Resultantly, Noticees 1–6 and 7-89 were alleged to have violated the provisions of the PFUTP Regulations, 2003.
The Tribunal, after considering the show cause notice, replies and the submissions that followed thereafter, was of the opinion that in the instant proceedings, Sunrise Asian and its Directors, had devised an arrangement for manipulating the price of the scrip with 83 other entities, thus violated Regulations 3(a)–(d) read with Regulation 4(1) of the PFUTP Regulations, 2003. And since 77 out of the 83 ‘connected entities’ were counterparties to the sale of shares, thus violated Regulations 3(a)–(d) read with Regulation 4(1), Regulations 4(2)(a) and (e) of the PFUTP Regulations, 2003. The Court further noted,
“…during the Financial Years 2013, 2014 and 2015, Sunrise Asian had registered a profit of only ₹0.27 Crore, ₹0.70 Crore and ₹0.95 Crore, respectively. The aforementioned actions of the aforementioned Noticees as detailed in the preceding paragraphs clearly resulted in ‘fraud’ under the PFUTP Regulations, 2003, being committed, which in turn affected the interests of investors in the securities market”.
Consequentially, Noticees 1-6 were restricted to access the securities market for a year, while Noticees 7-89 for six months. Whereas proceedings intiated against Noticees 50, 69 and 70 i.e. Ramesh Gopaldas Kataria, Ramesh G. Kataria HUF and Sarojini Ramesh Kataria stood abated.[Sunrise Asian Ltd., In re WTM/GM/IVD/ID7/13328/2021–22, decided on 06-09-2021]
Agatha Shukla, Editorial Assistant has reported this brief.
