Pinnacle moves apex court against Sebi ban order

Pinnacle Shares Registry, which was debarred by Sebi and told to wind up its activities following alleged fraudulent transfer of shares, has challenged the order of the market regulator before the Supreme Court.

The Securities and Exchange Board of India had cancelled the Registrar and Share Transfer Agent (RTA) licence of the Pinnacle Shares Registry (PSR) in October 2009, and asked the firm to wind up its business.

Sebi, in its probe, found that PSR had fraudulently transferred shares of genuine shareholders of Parsoli Corporation to its promoter, Parsoli, and front entities. PSR was the RTA for Parsoli.

During the proceedings, a bench headed by Chief Justice S H Kapadia adjourned the matter after it was informed that an appeal by Parsoli was already pending.
    
"Since the matter against Parsoli is pending, this appeal stands adjourned for 12 weeks," said the bench, which also comprised Justices K S Radhakrishnan and Swatanter Kumar.
    
Parsoli, a Gujarat-based Islamic stockbroking firm, was also restricted from carrying out any direct or indirect trading by Sebi.
    
Earlier, on April 30, 2010, the Securities Appellate Tribunal (SAT) had dismissed a petition filed by PRS, challenging Sebi's order.
    
Sebi had banned the firm from doing fresh business after it was reportedly found guilty of delaying dematerialisation requests and rejecting many requests in this regard for false and misleading reasons.
    
The regulator had inspected PSR's documents after some shareholders of Parsoli Corporation complained that their share transfer requests were rejected.
    
Sebi had come across around 450 instances, where the shares of genuine Parsoli shareholders were fraudulently transferred to individuals belonging to its promoter group. The shares were transferred through forged signatures on the transfer deeds.
    
PSR had also rejected share transfer requests of genuine shareholders on the grounds of signature mismatches, whereas the shares were already transferred in favour of its promoters or front entities.