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Market regulator Sebi has barred one individual from the capital market for three years for indulging in fraudulent trade practices during the initial share sale of Spice Communications Ltd (SCL) in 2007.
In its order dated July 10, the Securities and Exchange Board of India (Sebi) has restrained "Tejas Nitin Kanabar from accessing the capital market and prohibit him from buying, selling or otherwise dealing in the securities market, directly or indirectly, for a period of three years."
According to Sebi, Kanabar by way of manipulative, deceptive and fraudulent scheme cornered shares reserved for retail investors in the initial public offer (IPO) of SCL by making fictitious applications in the retail category.
The regulator had initiated a probe after observing that certain entities who were allotted shares in the retail investors category in the IPO had immediately transferred those shares to certain operators thereby enabling cornering of shares in the segment.
SCL was listed on the BSE on July 19, 2007.
The probe revealed that Kanabar had received 17,986 shares of SCL from 14 entities through off-market transfers on the listing day (July 19, 2007).
He then sold scrips 5,000 shares on the listing day itself and the remaining 2,896 shares were offloaded on July 23, 2007 and thereby made an unlawful gain of Rs 99,143 on account of price difference between the IPO price and the listing price.
"By indulging in such fraudulent, manipulative and deceptive practices, he (Kanabar) had deprived other retail investors of their legitimate allocation of shares in the IPO of SCL thereby resulting in an unlawful gain of Rs 99,142.32 to himself," Sebi said.
