The Bombay Stock Exchange (BSE) has decided to make a direct representation to the Securities and Exchange Board of India (Sebi) chairman D R Mehta in connection with Pentamedia Graphics' preferential allotment. BSE is reportedly questioning Sebi's inquiry ending in exonerating the company from any wrongdoing.
Exchange authorities were learnt to be unhappy with the Sebi findings which exonerated the company from any violation in pledging shares which carried a stipulated lock-in period of one year on them. Sources said the exchange authorities will be seeking clarifications from Sebi on its findings. The BSE is reported to be convinced of its facts in the matter and that it had a case for suspending trading in the scrip.
Sebi's letter to the BSE's executive director states that the company did not violate the lock-in norms since it had not transferred the shares after allotment. This was also confirmed by a letter from the National Securities Depository Ltd. The pledging of shares was done by the allottee's custodian and, hence, the company could not be held responsible for a transaction which has occurred between two other parties - that is Nikko and the Centurion which created the pledge.
Pentamedia has made a preferential allotment of one million equity shares, earlier this year, for a consideration of Rs 50 crore. The allottee of the shares, Malu Financial Securities, placed it with their safe custodian Nikko Securities, who then pledged it with Centurion Bank. When a broker complained that shares carrying a lock-in had found their way into the market, BSE instituted a probe and recommended suspension of trading in the shares of the company. The company, however. filed a case in the Chennai High Court and obtained a stay against the order.