Case: 1. SEBI, 2. In Re: Vatsa World Limited Vs Newage. Securities and Exchange Board of India
|Party Name:||1. SEBI, 2. In Re: Vatsa World Limited Vs Newage|
|Judges:||A.K. Batra, Member|
|Issue:||Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003 - Regulation 11|
|Judgement Date:||December 17, 2003|
|Court:||Securities and Exchange Board of India|
A.K. Batra, Whole Time Member
Investigations were conducted by Securities and Exchange Board of India (hereinafter referred to as 'SEBI') into the dealings in the shares of Vatsa World Limited (hereinafter referred to as 'VWL') for the alleged market manipulations. Investigations conducted for the period April, 2001 to July, 2001 revealed that prices of the scrip were manipulated.
1.1 M/s Newage Finsec Pvt Ltd. (hereinafter referred to as 'Newage') was one of the four largest trading clients in the scrip of VWL at Delhi Stock Exchange during the relevant period. Newage has dealt in the scrip through Emmkay Share and Stock Brokers Ltd., (hereinafter referred to as 'Emmkay') The authorized representative of Emmkay stated during the investigation by SEBI that one Shri Sanjiv Mahajan, the director of Newage used to place the above orders from 15, Bungalow Road, Kamala Nagar, New Delhi, which address is also the address of the registered office of VWL. Further, Shri Sandeep Bansal, one of the subscribers to the Memorandum of Association of Newage is a director of SRG Infotech Limited. The addresses of the two companies, viz. SRG Infotech Limited and VWL, as reported to DSE, from time to time, are the same. Further, M/s SRG Infotech is a promoter of one Status Management Services Ltd. One of the directors of Status Management i.e. Shri Sunil Kumar is also a director of VWL. Shri Sanjeev Mahajan, had earlier accompanied Shri Ashok Agarwal, promoter of SRG group of companies, to the office of SEBI, in connection with the investigations in the scrip of Vatsa Music Ltd. Thus, VWL is connected to SRG group and Newage is connected to VWL. 2. Pursuant to the investigation, a show cause notice dated April 16, 2003 was issued to Newage alleging it to have indulged in creation of false market in the scrip and hindered true price discovery thereby violated Regulations 3, 4(a), 4(b), 4(c) and 4(d) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995. No reply was received from Newage. Thereafter, a communication granting it an opportunity of hearing before SEBI on June 12, 2003 was sent vide letter dated May 30, 2003. In reply to the same, Newage sent a letter to SEBI dated 23rd May, 2003, which was received by SEBI on June 3, 2003 wherein some clerical mistakes in the show cause was pointed out by them.
2.1 A further show cause notice was issued to Newage vide letter dated June 6, 2003. Shri Sanjeev Mahajan, director of Newage replied to the show cause notice vide letter dated July 8, 2003. He stated as follows:
? he was a director in Newage
? Mr. Sandeep Bansal was...
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