The Securities Appellate Tribunal today asked market regulator Sebi to issue show-cause notice to Oudh Finance and Investments and pass final order in the case within three months of receiving replies.
The case relates to charges of market manipulations against Oudh in trading of global depository receipts (GDRs) - a financial instrument used to raise capital overseas - of six companies.
In September 2011, Securities and Exchange Board of India barred Oudh Finance from the markets after its preliminary examination found that the entity was involved in the manipulations.
Following an appeal against Sebi's move, SAT in an order dated April 8 asked it to "issue a show cause notice to appellant within a period of four weeks from today".
Further it has asked Oudh Finance to "file their reply to the show-cause notice within a period of four weeks of receiving the show cause notice".
SAT said: "Final order on the show cause notice shall be passed by the respondent (Sebi) within a period of 3 months from the date of receiving reply to the show cause notice."
Sebi had found that certain Foreign Institutional Investors were converting the GDRs underlying the shares of six companies into equity shares. They were then sold by them in the Indian market and most cancellations happened within a short period of time of their issuances.
Sebi noticed that a few entities were repeatedly appearing as counterparties to 33-75 per cent of those shares sold by FIIs in the scrips. Oudh Finance was found to have acted as counterparty to the sell transactions of the FIIs and had also traded with the others in the alleged group.
In September 2011, Sebi had restrained Oudh Finance from dealing in the capital market but had partially modified the order in April 2012 wherein the entity was allowed to sell securities held in its dematerialised accounts.
