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Securities and Exchange Board of India (Sebi) has dismissed a case against three entities for their alleged involvement in fraudulent and unfair trade practices in the shares of erstwhile Maytas Infra nearly five years ago.
In three similar-worded orders, Sebi said it did not find the matter against Vinay Mishra, Sreenivasan Ramakrishnan and Spark Derivatives & Securities a "fit case to impose monetary penalty".
"The matter is accordingly disposed off," it added. In its order dated March 28, Sebi observed that the allegations on the three entities for distorting "market integrity and price discovery process by manipulating the price of the scrip of Maytas," which led to fraud and deceit upon the investors in the market "does not stand".
The regulator had carried out a probe in the shares of Maytas (now known as IL&FS Engineering & Construction) from July 17, 2008 to December 16, 2008.
The investigation found that the promoters of Maytas and related entities had outstanding loans with IL&FS group for Rs 385 crore and SICOM for Rs 40 crore. In lieu of the said loans, they had pledged their Maytas shares with IFCI Ltd, SICOM, IL&FS Financial Services, IL&FS Trust Company and Investsmart Financial Services Company within days after the Maytas scrip was listed in October 2007 till end of June 2008.
Further, the knowledge of the pledge of the promoters' and related entities' shares was not public and if the closing price of Maytas fell below Rs 400, these pledges would get invoked.
Investigations found that to keep these pledges intact, the only way for the promoters was to ensure that the closing price did not fall below Rs 400.
It was alleged that three entities had a role in maintaining the price of the shares so that it does not fall below Rs 400.
However, in its adjudication order against the three entities, Sebi noted that in absence of material, it cannot be said that the buying of shares of Maytas by them was motivated with the purpose to maintain the price of the scrip of the company above a particular level.
"Noticee committed money for the purchase of shares of Maytas, the order placement/ execution decisions was taken by the broker Spark Capital Advisors (India) Pvt Ltd. Thus, it cannot be held that the noticee had distorted market integrity and price discovery process by trading in the scrip of Maytas," it added.
