The Securities and Exchange Board of India (SebiI) is planning to issue fresh show cause notice to Ketan Parekh and four entities related to him for manipulating the stock movements of Global Trust Bank and Lupin Laboratories. Sebi will serve the notices to Triumph International Finance Ltd, NH Securities Ltd, Classic Share & Stock Brooking Services Ltd, and Triumph Securities Ltd.
The markets regulator has already initiated inquiry proceedings for prima facie violations of Sebi (Prohibition of Fraudulent and Unfair Trade Practices to securities market) regulations and Sebi (brokers and sub-brokers) regulations against KNP Securities Ltd. and V N Parekh Securities Ltd.
Sebi has already issued show cause notice to Ketan Parekh-linked non-intermediary firms, ClassicCredit, Panther Fincap and Management Services and Saimangal Investrade Ltd in this regard.
The regulator has also found prima facie evidence of violating takeover code by Ketan Parekh and entities associated with him in the case of Aftek Infosys and Shonkh Technologies, Sebi has said in its report and has already initiated adjudication proceedings and show cause notices.
As regards non-intermediary entities of Parekh, prima facie involvement in the price manipulation of GTB and Aftek stocks have been established. Sebi has that the scrutiny of trades at Credit Suisse First Boston revealed that circular trading was resorted to by Luminant Investment, Panther Fincap and Classis Credit, the non-intermediary entities of Ketan Parekh.
Sebi has issued a show cause notice to Ketan Parekh entities and other persons in acting in concern for violating the takeover norms in Aftek Infosys placement in 1999-200. The notice was issued to Classic Credit, Panther Investtrade, Mividha Investments and JDP Shares and Finance for acquiring more than 15 per cent of the shares of the company. This, according to Sebi notice, is in violation of Section 15H of Sebi Act 1992 and regulation 10 of Sebi's Substantial Acquisition of Shares and Takeover Regulation 1997.
Ketan Parekh group cornered substantial quantity of shares of Aftek Infosys, especially during January 1999 to December 1999. These acquisition made by the Parekh group exceeded the threshold limit of 15 per cent stipulated under the takeover regulations.
On January 25, 1999, Aftek Infosys made its first preferential allotment of 15 lakh shares at par, representing 26.12 per cent of the enhanced equity capital of Rs 5.74 crore. The Ketan Parekh group also acquired 4.55 lakh shares, representing 7.92 per cent of company's equity, in the preferential allotment. While Ketan entities also purchased shares from the preferential allottees to the extent of 4.50 lakh shares, representing 7.83 per cent of Aftek's equity. Interestingly, Kular and family, a close associate of Ketan Parekh group, have now been classified as promoters/associates by Sebi.
Sebi investigation also indicate that there was acquisition of 8.85 lakh shares from promoters by Ketan Parekh entities by way agreements structured as financing agreements. Ketan Parekh acquired about 17.16 per cent of then paid of Rs 5.74 crore. As on November 11, the number of shares acquired in the preferential allotment and subsequently from preferential allottees stood at 9.05 lakh shares, 15.76 per cent of company's capital. Ketan Parekh and associate entities also acquired 8.85 lakh shares, 15.41 per cent of the capital, through other routes.
Sebi in its show cause notice has said these shares were not acquired in a transparent manner since disclosures were not made to the company or stock exchange upon acquisition exceeding 5 per cent of the voting capital of the company by Ketan entities. Panther Investrade had informed the company when its acquisition exceeded 5 per cent, contrary to the requirement of regulation 7 of takeover code. According to Sebi, this lack of transparency kept the shareholders in the dark of the acquisition and prevented dissemination of market sensitive information. Further, no public was made to the remaining shareholders of the company.
