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TMI Blog2016 (7) TMI 1711X X X X Extracts X X X X X X X X Extracts X X X X ..... apeeshwar Vintrade Pvt Ltd, Navdurga Investment Consultants Pvt Ltd, Orchid Solution Private Limited, Overload Financial Advisory Pvt. Ltd., Padma Impex Private Limited, Ramya Mercantile Pvt Ltd, Rangoli Distributors Private Ltd, Reachsmart Dealtrade Pvt. Ltd., Sebika Commodities Private Limited, Spark Commodeal Private Limited, Swarnprakash Traders Pvt Ltd. ORDER 1. Pursuant to detection of a huge rise in the traded volume and price of the shares of Pine Animation Limited {formerly known as Four K Animation Limited and hereinafter referred to as "Pine"} on Bombay Stock Exchange Limited ("BSE") during the period from May 22, 2013 to January 30, 2015 (hereinafter referred to as "Examination Period"), Securities and Exchange Board of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holdings i.e. 9, 27,400 shares to 6 entities, who in turn transferred the shares to 62 entities (the total of 68 entities, hereinafter referred to as "Promoter related entities") during the period from December 28, 2012 to February 05, 2013. 49 of the Promoter related entities subsequently sold 54.76% of the shares received from the promoters. c) Subsequently, on March 15, 2013, Pine made another preferential allotment of 97,00,000 equity shares at the price of Rs. 10 per share (hereinafter referred to as the "2nd preferential allotment") to 48 entities who included 5 entities who were allotted shares in the 1st preferential allotment. d) In total, Pine allotted 2,47,00,000 equity shares to 92 entities. The equity shares allotted on pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Promoter related entities. h) Such sharp rise in price and volume of the scrip was not supported by any acceptable market factor such as fundamentals, trading history, corporate announcements, etc as discussed in the interim order but was on account of non-genuine and manipulative trading in the scrip by certain entities. 3. In this backdrop, SEBI, vide an ad interim ex-parte order dated May 08, 2015 (hereinafter referred to as "interim order "), restrained Pine along with other 177 entities, including 26 entities mentioned above (hereinafter referred to as "Noticees"), from accessing the securities market and further prohibited them from buying, selling or dealing in securities in any manner whatsoever, till further directions. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k an opportunity of personal hearing. Therefore, in my opinion, an ample time has been provided to the Noticees to respond to the interim order and to seek an opportunity of personal hearing, and hence, I am constrained to proceed with the matter on the basis of the material available on record. 6. I have considered the allegations levelled against the Noticees and have perused the documents available on record. I note that in the instant case, the directions issued against the Noticees are interim in nature and have been issued on the basis of prima facie findings. SEBI had issued directions vide the interim order in the matter in order to protect the interests of investors in the securities market. Detailed investigation in the matter is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive way and made huge illegitimate profit in the whole event. 8. The interim order has also brought out the connection / relationship of the exit providers with the company and other entities involved in the entire scheme illustrated therein. As regards the preferential allottees, it is noted that it is a settled position of law that preferential allotment of shares is an issue of shares by an issuer to select person or group of persons on a private placement basis unlike a public issue where funds are raised by inviting subscriptions from public in general. It is also a matter of common knowledge that a preferential allotment is made to the persons/entities on a one-to-one basis who are acquainted/familiar with the company and/or its prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erential allottees, Promoter related entities and Exit Providers have acted in connivance for implementation of dubious plan, device and artifice that has led to the misuse of stock exchange mechanism to artificially increase price and volume of the scrip to provide illegitimate gains to the preferential allottees and Promoter related entities in order to claim LTCG benefits that has not only eroded the market integrity but has also been detrimental to the interests of investors who might have been lured to invest in the scrip due to such manipulative and fraudulent trading in the scrip and price movement. I, therefore, do not find any reason to revoke or modify the directions of the ad interim ex parte order dated May 08, 2015 in the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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