Securities Appellate Tribunal
In Re: Shri Lalit Dua And His Associates ... vs Unknown on 21 March, 2006
ORDER
G. Anantharaman, Member
1. Background 1.1. Publishing of Research reports on stocks by various entities as well as broking firms has been under the scanner of SEBI for some time now. It has been recently noticed that such research reports have been published with metronomic regularity and the recommendations have been made and distributed through websites of brokerage firms. Such recommendations disseminated through any public accessible media like financial newspaper, TV, websites etc often catch the general investor's attention and is not without its concomitant effects on investment decisions; the effects having being largely amplified on account of the perceived 'knowledge and expert' recommendation. Hence, it is important that the person giving such recommendations to the public at large should be doing so in a responsible and unbiased & unprejudiced manner. Equally it behoves him to simultaneously make adequate disclosures of his interest so as to address issues of potential conflict of interest. Of late, SEBI has been noticing blatant breaches of law when such recommendations are aired, resulting in betrayal of trust and confidence in the market for wangling a patently unfair gain by purveyors of such recommendations. As part of its ongoing effort to ensure fair and transparent markets, SEBI has recently passed interim ex-parte orders against two such entities.
1.2. In continuation of the avowed objective to safeguard market integrity, SEBI looked into the recommendations given by Shri Lalit Dua, director of LRS Portfolio & Advisory Services Pvt. Ltd. The research reports of Shri Dua were published on www.indiainfoline.com, a website of SEBI registered stock broker India Infoline Ltd. The website also disseminates detailed information about listed corporates, general comments on capital markets and other financial aspects for the consumption of the investor. In view of the same, several investors visit the website on a regular basis.
1.3. A distinct modus operandi was noticed in the conduct of Shri Lalit Dua, director of LRS Portfolio & Advisory Services Pvt. Ltd. Shri Dua used to disseminate company favourable articles in media on a frequent basis projecting a bright future of companies whose shares are thinly traded. Thereafter, in contrast to the recommendations, his associated entities used to offload shares (purchased prior to the recommendations) of such companies on the back of induced investor interest created by his recommendations. It was also prima facie noticed that promoter shareholding had decreased in several such scrips wherein recommendations had been given. The entire modus operandi indicates a deliberate and crafty strategy to make personal gains at the expense of investors by enticing them to participate in the trading of the shares of the company. In view of the aforesaid observations, a preliminary analysis was initiated into the matter. The findings of such analysis are discussed below.
2. Preliminary Findings 2.1. Shri Dua publishes his Research analysis under the name of LRS Research (LRS Portfolio & Advisory Services Pvt. Ltd). LRS Portfolio & Advisory Services Pvt. Ltd is registered sub broker with SEBI (Registration no. INS231500039; exchange-NSE, main broker- Integrated Master Securities Ltd). On inquiry, LRS Research claimed that it basically engaged in investments and trading of shares which include trading on BSE, NSE in the cash and F&O. segment. The registered office of the LRS Research is 64, Old Anarkali, Krishna Nagar, Delhi-110051. It is also informed by LRS Research that it has three employees.
2.2. It is also gathered that Geometric Securities & Advisory Ltd (Geometric Securities), a SEBI registered sub broker (Registration No. INS011439234; Exchange- BSE) has the same address as LRS Research i.e. 64, Old Anarkali, Krishna Nagar, Delhi-110051. The director of the sub broking firm is Shri Manoj Dua, brother of Shri Lalit Dua. As per the KYC's details available with the exchange, it is observed that the name of their father is mentioned as Shri Ram Saran Dua and their common telephone number 22419120 is registered under the name of Shri Ram Saran Dua residing at 64, Anarkali , Krishna Nagar Delhi 51, which is also the address mentioned in Lalit Dua and Manoj Dua's KYC Details 2.3. Shri Lalit Dua has published a total of 36 research reports from April 2004 to August 2005 on the website www.indiainfoline.com. It has been noticed that most of the scrips in which Shri Dua has published the research reports are listed at the BSE and regional Exchanges. These companies are mainly based in New Delhi (10), Kolkatta (5), Gujarat (5), Mumbai (5) and Rajasthan (4). The scrips are being traded at the BSE in following groups:
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Group/Segment B1 B2 S T TS Z Total Number of Scrips 3 13 10 4 3 3 36 ----------------------------------------------------------
It is noted that the companies for which the research reports were published are mostly in the mid-cap or small cap (belong to B2, S and T Segment). Out of 36 scrips, 13 are being traded in group B2, 10in Group S and there are 10 scrips which are the subject matter of Exchange actions (T, TS and Z). It is significant to note that Shri Dua has not published any research report for the scrip which is being traded in group 'A'.
2.4. The list of the stocks in respect of which recommendations have been given is detailed below:
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No. Name of the scrip Recommendation Date Group
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1. Season Furnishing Ltd 30-Aug-05 B2
2. Capital Hotels and Developers Ltd. 3-Aug-05 TS
3. Triton Valves Limited 18-Jul-05 B2
4. ANG Exports Limited 11-Jul-05 B2
5. Jhunjhunwala Vanaspati Limited 22-Jun 05 B2
6. Allianz Securities Ltd. 01-Jun-05 B2
7. Rama Paper Mills Ltd 18-May-05 Z
8. Samtex Fashions Ltd 4-May-05 S
9. Goldmines Media Ltd 13-Apr-05 B2
10. Ashirwad Steel and Industries Ltd. 8-Apr-05 B2
11. Zenith Fibres Ltd. 16-Mar-05 B2
12. Madhav Marbles & Granites Ltd. 3-Mar-05 B1
13. Vimal Oil & Foods Ltd. 25-Feb-05 S
14. Medi Caps Ltd. 16-Feb-05 S
15. Samtel India Ltd. 10-Feb-05 TS
16. Om Metals Ltd. 2-Feb-05 Z
17. Karuturi Networks 20-Jan-05 T
18. Zen Technologies Ltd. 12-Jan-05 T
19. Acknit Knitting Ltd. 5-Jan-05 B2
20. Electrotherm (India Ltd.) 28-Dec-04 Z
21. Sandesh Ltd. 22-Dec-04 T
22. Magma Leasing 15-Dec-04 B2
23. Sky Industries 7-Dec-04 S
24. Hindustan Tin Works 30-Nov-04 S
25. Dr. Agarwal's Eye Hospital 23-Nov-04 S
26. JMC (Projects) 18-Nov-04 TS
27. ABL Biotechnologies Ltd. 3-Nov-04 T
28. Tera Software Ltd. 18-Oct-04 B2
29. ETC Networks 11-Oct-04 B1
30. Competent Automobiles Co. Ltd. 23-Sep-04 S
31. Greenply Industries Ltd. 15-Sep-04 B2
32. FCGL Industries Ltd. 9-Sep-04 B2
33. Sangam India Limited 4-Sep-04 B1
34. Nagreeka Exports Ltd. 2-Sep-04 S
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No Name of the scrip Recommendation Date Group Siro Plast 18-Aug-04 S 35. Aro Granite Industries 7-Aug-04 S 36. 2.5. During the course of preliminary investigation, based on feedback received from the stock exchange, it was brought that there are as many as 21 entities who prima facie are related to Shri Dua in one way or the other such as through common address, phone numbers and directors etc. Thereafter, details were sought from the exchange (BSE) for the related entities regarding their trading, at the exchange. All these 21 entities have been trading through broker Integrated Master Securities Pvt Ltd. Few of these entities namely Dyna Cables Ltd (Director: P.S Tandon and Lalit Dua), Geometric Securities and Camphar Securities have also been trading through another broking firm LSE Securities Ltd. However, transactions through broker Integrated comprise a very significant portion of the total trading by these entities and only negligible/marginal transactions have taken place through other brokers. The details of the entities as obtained from the BSE are tabulated below:
No. Name of Client Client Name of Common Links
code directors (Address/Phone
number/relations)
1. Geometric Securities & N18 G001 Manoj Dua 64, Old Anarkali,
Advisory Service P.Ltd TNCN18 Krishna Nagar Delhi
110051. Phone :
9871396179
2. Camphar Securities & Adv C034 Manoj Dua 64, Old Anarkali,
Pvt Ltd CC/C034 Krishna Nagar Delhi
TNCN19 110051 Ph. 011-
22419120 011-55272844
3. B.R. Financial CC/B001 Lalit Dua 64, Old Anarkali,
Service. Pvt. Ltd. Krishna Nagar Delhi
110051
4. Dyna Cables Ltd TNCC104 P.S Tandon 64, Old Anarkali,
CC/D003 & Lalit Dua Krishna Nagar Delhi
D003 110051 Ph. 9810615759
5. Ganga Infin Pvt Ltd. CC/G008 Balraj jain 63, Shankar Market,
Cannaught Place Delhi
110001 Ph. 31072699
6. Innovative Money Matters CC/I021 Sanjay Kumar A-B/202,Janakpuri
P.Ltd Delhi 110058, Ph.
31072699
7. JKC Leasing & Sec.Ltd. CC/J006 Lalit Dua 4, Vishvasadan, Dist-
J006 Commercial Centere,
Janakpuri, New Delhi
58
Ph. 9810615759
304, Vishvasadan,
Dist-Commercial
Centere, Janakpuri,
New Delhi 58
Ph. 9810615759
8. Lrs Portfolio & Advisory CC/L002 Sanjay Kumar 64-Old, Anarkali,
Service P.Ltd L002 L017 & Lalit Dua Krishna Nagar Delhi
110051
Ph. 011-22419120 Ph.
9810615759
9. Lalit Dua Huf CC/L004 Lalit Dua 64-Old, Anarkali,
Krishna Nagar Delhi
110051
Ph. 9810615759
10. Ritu Dua CC/R018 NA 64-Old, Anarkali,
Krishna Nagar Delhi
110051
Ph. 9810615759
11. Subodh Tripathi CC/S091 NA 64-Old, Anarkali,
Krishna Nagar Delhi
110051
12. Sparrow Marketing P.Ltd. CC/S095 Anil sharma 890, Kucha Kabil
Attar, Chandni Chowk
Delhi 110006
13. Srs Vijay Sales P.Ltd. CC/S096 Yashpal D-223,Gali No. 9, Laxmi
sharma Nagar Delhi 110092
Ph. 31072699
14. Latika Dua L009 NA 64-Old, Anarkali,
Krishna Nagar Delhi
110051
Ph. 9810615759
15. M/S. L.D. Investments L018 L004 Lalit Dua 64, Old Anarkali,
Krishna Nagar, Delhi
110051 Ph. 22419120
Anarkali, Krishna Nagar
Delhi 110051
16. Manoj Dua M002 L003 NA
17. Raj Dua MD002 NA
18. Manoj Dua MD003 NA
19. Ram Dua/Ramsharan Dua MD005 NA
20. Lalit Dua MD004 NA
21. Consolidated Securities N158 Lalit Dua & 8/19 Third Floor Wea
Limited Rohit Gupta Pusa Lane Karol
Bagh, New Delhi 16
CC/C008 412,18/12, Wea Arya
Samaj Road, Karol
Baug, New Delhi
110005.
Ph. 26963036
2.6. It may be observed from the above table that among 21 clients, as many as 15 clients have common address. It is also seen that in respect of 6 clients for whom the address is not common, such clients have reported a common phone number or their directors are common. Further, it is also seen from the details given in above table that the broker has assigned different codes to same client.
Thereafter, a sample examination was undertaken in respect of trading by these entities in these scrips for which the research reports were published in the recent past (May 2005 onwards) by Shri Dua. The transaction by these entities were sought from the exchange (BSE) and the broking firm Integrated Master Securities Ltd for a total of 8 scrips. These scrips are - Samtex Fashions Ltd, Allianz Securities Ltd, Capital Hotels and Developers Ltd, ANG Exports Limited, Jhunjhunwala Vanaspati Limited, Rama Paper Mills Ltd, Triton valves Ltd and Season Furnishing Ltd.
Examination of the trading pattern of the related entities 3.1. Samtex Fashion Ltd the scrip on May 03, 2005 was Rs. 29.55/--. Another supplementary report on this scrip, highlighting the growth prospects of the company was also published subsequently on July 13, 2005.
3.1.2 Samtex Fashion Ltd is a Delhi based company. The company is engaged in business of manufacturing of Men's & Women's structured garments. The face value of the scrip is Rs. 10/-. From the price volume details it was noted that the company shares were thinly traded prior to month of May 2005. For the month of April 2005 the average volume traded was 36625 shares and the highest closing price of scrip was Rs. 32.60 and lowest price was Rs. 21.95. It is observed that the price of the scrip increased to Rs.40.55 on June 30, 2005. Similarly rise in volume in the scrip was also observed in the month of June 2005. The average daily volume traded in the scrip at the exchange was 48450 shares during June 2005. The volume of scrip increased to 654832 shares and closing price was Rs.54.20 on July 12, 2005.
3.1.3 The trade data for the scrip for the period during April 2005 -July 2005 by these clients were examined. It was noticed that major broker through whom these clients have traded in the scrip was Integrated Masters Securities Ltd.
3.1.4 A sharp rise in volume in the scrip was observed on April 06, 2005 and April 13, 2005. Further it was observed that broker Integrated Masters Securities Ltd. has purchased 1,72,000 shares accounting for 99.46% of the market volume of 1,72,925 shares. Upon perusal of the transactions of the broker it is observed that the broker has done cross deals for his clients. The broker has purchased 1,65,000 shares on behalf of its client, Consolidated Securities Ltd, (Director: Rohit Gupta and Lalit Dua) and sold 1,65,000 shares on behalf of persons acting in concert or connected to promoter (of Samtex Fashion Ltd) related entities namely, Anju Mittal and Rama Mittal. These 2 entities sold 85,000 shares and 80,000 shares respectively. This deal constitutes 95% of the market volume for the day. It is pertinent to note that all these transactions were opening trades and were executed at Rs. 19.85.
3.1.5 Similarly, on April 13, 2005 the Broker Integrated Master Securities (P) Ltd bought 1,66,787 shares accounting for 81.90% of the market volume of 2,03,638 shares. It dealt on behalf of its client, Consolidated Securities Ltd which brought 1,58,123 shares, the major counter party to the trades being the same broker i.e Integrated Master Securities (P) Ltd. dealing for clients Suresh Goel (Promoter / Director of the Samtex Fashion Ltd ), Sameer Goel & Rachna Goel (Director-Sincerely Finance & Investment (P) Ltd), who sold 60,000 shares, 20,000 shares and 55,000 shares respectively. These clients were classified under the promoter's categories in the distribution schedule of the company. Exchange has also reported that all these clients are connected to the company promoter / Directors. The trades were executed in the price range of Rs. 23.80 to Rs. 23.90 i.e at the prevailing market price levels.
3.1.6 It was also observed that the buying client Consolidated Securities Ltd. (Directors: Rohit Gupta and Lalit Dua), had made substantial purchases in the shares of
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Date Avg. Rate Buy Quantity Sell Quantity
----------------------------------------------------------
01-Apr-05 21.53 5530
21.97 17955
05-Apr-05 21.85 15000
22.80 27628
06-Apr-05 19.85 165000
11-Apr-05 22.32 2350
13-Apr-05 23.96 158123
25-Apr-05 33.10 4000 4000
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Total 350003 49583
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It is thus significant to note substantial buying by the Lalit Dua related entity Consolidated Securities (substantially through cross deals) from the entities relating to the company, prior to the publication of the research report by Shri Dua 3.1.7 The post recommendation (The first report was published on May 4, 2005) transaction of Consolidated securities Ltd in the scrip are given below:
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Date Gross Purcha Gross Sales Net Sale Exchange
Buy se rate Sale Rate Volume
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5-May-05 1000 33.82 -1000 104288 6-May-05 34278 34.2 34219 35.21 59 136317 9-May-05 41458 35.74 -41458 97387 10-May-05 15161 36.03 54981 35.48 -39820 105540 11-May-05 800 33.53 800 34.97 0 32323 13-May-05 34279 36 31782 36.57 2497 75307 16-May-05 324429 37.28 75640 39.09 248789 476452 17-May-05 8250 39.05 44889 39 -36639 106161 18-May-05 9371 37.26 -9371 29541 19-May-05 102025 39.98 110017 39.8 -7992 175192 20-May-05 105364 42.84 59843 41.68 45521 209827 23-May-05 5705 42.44 44254 42.91 -38549 89240 24-May-05 1063 40.53 5200 41.97 -4137 46213 25-May-05 12350 39.04 -12350 62840 31-May-05 2000 37.03 2000 25935 1-Jun-05 2000 37.27 -2000 26558 4-Jun-05 15000 39.75 21664 39.55 -6664 53619 6-Jun-05 22859 39.28 -22859 48409 7-Jun-05 3400 38.55 -3400 23206 8-Jun-05 1500 38.42 -1500 25485 9-Jun-05 9720 38.61 -9720 45042 10-Jun-05 10000 38.9 2000 38.47 8000 31356 13-Jun-05 50322 38.4 2649 38.37 47673 60634 14-Jun-05 26772 39.09 26772 74682 15-Jun-05 32410 39.1 12010 41.73 20400 222463 16-Jun-05 9926 40.33 18710 40.2 -8784 62760 20-Jun-05 14787 38.96 4500 39.72 10287 72327 22-Jun-05 10250 40.03 10250 40444 23-Jun-05 3915 38.53 3915 34625 27-Jun-05 8000 38.03 8000 21697 28-Jun-05 5630 37.13 5630 20926 29-Jun-05 11850 38.22 11850 66769 12-Jul-05 50066 54.1 -50066 654832 14-Jul-05 33963 52.68 -33963 245807 15-Jul-05 33839 52.06 -33839 158811 18-Jul-05 33771 52.58 -33771 609841 19-Jul-05 28890 55.8 -28890 276964 20-Jul-05 34000 57.5 -34000 193501 21-Jul-05 33000 53.46 -33000 119941 22-Jul-05 32387 50.26 -32387 208555 25-Jul-05 33546 49.24 -33546 98795 26-Jul-05 32990 46.46 -32990 114932 27-Jul-05 33000 46.39 -33000 49530 29-Jul-05 33000 45.96 -33000 61585 1-Aug-05 33997 46.59 -33997 66928 2-Aug-05 33000 47.06 -33000 66540 8-Aug-05 23633 43.04 -23633 71836 9-Aug-05 23633 43.76 -23633 72008 10-Aug-05 20000 44.21 -20000 44207 11-Aug-05 23633 44.49 -23633 51421 12-Aug-05 23633 43.71 -23633 61233 16-Aug-05 21200 44.11 -21200 89651 24-Aug-05 945 39.32 945 39.19 0 55863 13-Sep-05 31498 48.58 -31498 190287
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833161 1274440 -441279
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3.1.8 It is noticed from the above table that the client Consolidated Securities Ltd has transacted in the scrip in substantial quantity during May-August 2005. It is pertinent to note that the Consolidated Securities Ltd was net seller of 4,41,279 shares during the post recommendation period. It has bought 8,33,161 shares and sold 12,74,440 shares.
3.1.9 It is observed that the said client has started offloading from July 12, 2005 onward. However it is relevant to note that the research report dated May 04, 2005 and July 13, 2005 projected that Samtex Fashion Ltd has a bright future. (The price of scrip touched its peak on July 20, 2005 to Rs.60; currently the scrip is being traded at Rs.30/- and last two weeks average quantity is 23486 shares per day).
3.1.10 Shareholding Pattern of the company:
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Description as on March 31, 2005 June 30, 2005
No of Shares % of No of % of
--------------------------------------------------------------------
Holding Shares Holding Foreign Shareholders 5750 0.08 23926 0.35 Institutions 341400 4.95 28124 0.41 Govt Holding 0 0 0 0 Non Promoter Corporate Holding 807111 11.7 1537071 22.28 Promoters 3834200 55.57 3234400 46.88 Public & Others 1911539 27.7 2076479 30.09
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Total 6900000 100 6900000 100
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3.1.11 From the above table it is seen that the shareholding of promoter group has decreased substantially from 55.57% to 46.88%. There is thus a significant decline in the shareholdings by promoter group. Further there is sharp increase in the shareholding of Non- promoting corporate bodies. From the analysis of shareholders having more than 1% shareholding in the company it is noted that Consolidated Securities' shareholding was 2.04 % at the quarter ending March 2005 which increased to 8.93 %(largest single shareholder) Quarter ending June 2005. The name of Consolidated Securities does not appear in the list of shareholders having more than 1% of shareholding in the company at the end of quarter ending September 2005.
3.1.12 From the foregoing findings, it is evident that there is a well orchestrated scheme on part of the research analyst to mislead investors and profit at their expense. Firstly, related entities build up substantial position in the shares of a nondescript company. This building up of positions is done substantially via cross deals from promoters (who are selling shares). Some market purchases are also carried out. Thereafter, a buy recommendation is given on the stock touting positive developments in the company. Subsequent to these recommendations, these entities offload shares to unsuspecting investors. The offloading is done at higher prices than the prices at which shares were purchased initially prior to the recommendations.
3.1.13 It is also significant to note that Consolidated Securities Ltd, wherein Lalit Shri Dua is a director has decreased its shareholding in the company within the three months - this is the period for which Shri Dua has given buy recommendation stating the company has bright future.
3.1.14 Further it is also noted that the company - Samtex does not seems to have disclosed the transactions by Consolidated Securities Ltd to the exchange which is mandatory under the SEBI (Prohibition of Insider Trading) Regulations, 1992. The regulation requires company to make disclosures if an entity acquires 5% or more than 5% of shares of a listed company. Under the SEBI regulations it is also mandatory to disclose the change in shareholding in respect of persons holding more than 5% shares in a listed company. This fact coupled with substantial transactions by Consolidated before and after the recommendations, sale by promoters gives rise to suspicions of complicity between the company, promoters and Consolidated Securities. This needs to be examined further.
3.2. Allianz Securities Ltd 3.2.1 Shri Dua had published a research analysis of the scrip Allianz Securities Ltd on June 01, 2005 giving Buy recommendation. The prevailing market price was 16/share.
3.2.2 Allianz securities Ltd is a Delhi based company. It is engaged in the business of finance and investment. The face value of the scrip is Rs.6/- each share. The company is the member broker of National Stock Exchange and OTCEI. The company is also a registered with SEBI as a Merchant Banker. From the price volume details it was noted that the company shares was thinly traded prior to month of May 2005. The average volume traded for the month of April 2005 was 4468 shares and the highest closing price of scrip was Rs.10.23 and lowest price was Rs.9.26. The average volume traded for the month of June 2005 was 124060 shares. The price of scrip had increased to Rs.75 on July 26, 2005, while the volume was 1666218 shares on June 08, 2005.
3.2.3 Transactions data for the trading in scrip for the period during April 2005 - August 2005 by the 21 related clients were sought from exchange. It was seen that in this scrip, a total of 9 among these 21 have transacted during the period of examination. The major broker through which these clients have traded in the scrip was Integrated Masters Securities Ltd.
3.2.4 The transactions in the scrip by these entities are tabulated below: 2.
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S. No Client Name Buy quantity Sell quantity
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April 01-June 01, 2005
1. Camphar Sec.& Adv.P.Ltd. 28916 28916 Consolidated Securities Ltd. 5000 43502
3. Geometric Securities 46638 220939 Total 80554 2,93,357 June 02, 2005- August 2005
1. Camphar Sec. and Adv.P.Ltd. 6000 6000
2. Consolidated Securities Ltd 216763 179261
3. Ganga Infin Pvt Ltd. 104178 104178
4. Innovative Money Matters P.Ltd 173728 1006700
5. Sparrow Marketing P.Ltd. 196599 173728
6. SRS Vijay Sales P.Ltd. 277501 196599
7. Manoj Dua 11700 227401
8. Geometric Securities 100 13960
9. Lrs Portfolio & Adv. Serv. Ltd. 156164 156164
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Total 1142733 20,63,991
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Grand Total 1223287 2357348
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3.2.5 From the table above it may be noted that even though Shri Dua has given a buy recommendation on the stocks his associated entities has sold substantial quantities of shares in the scrip. It is further significant to note that these entities have accumulated some shares prior to the recommendation given by Shri Dua. During April- august 2005 these entities had bought 12.23 lacs shares and sold 23.57 lacs shares. Prior to the recommendation given by Shri Dua, these entities has bought 80554 shares and sold 2.93 lacs shares. During post recommendation (June 02, 2005- August 2005) period these entities had bought 11.42 lacs shares and sold 20.63 lacs shares.
3.2.6 It also has been noticed that the trading constituted a major part of exchange volume. Total exchange volume during the period was 4593997. These entities has bought 1223287 shares amounting to 26.6% and sold 2357348 shares amounting to 51.3% of exchange volume.
3.2.7 Shareholding Pattern of the company:
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Description as on June 30, 2005 September 30, 2005
No of % of No of % of
Shares Holding Shares Holding
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Foreign Shareholding 173248 1.63 787160 7.42 Institutions Shareholding 9600 0.09 304400 2.87 Govt Holding 0 0 0 0 Non Promoter Corporate Holding 1408931 13.28 1390860 13.11 Promoters Shareholding 4776230 45 3780500 35.62 Public & Others Shareholding 4245091 40 4350180 41
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Total 10613100 100 10613100 100
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3.2.8 From the above table it is noted that the shareholding of promoter group has decreased substantially from 45% to 35.62%. There is thus a significant decline in the shareholdings by promoter group. From the analysis of shareholders having more than 1% shareholding in the company it is noted that Innovative Money Matters P.Ltd's shareholding (a related entity to Shri Dua) was 10.15 % %(largest single shareholder excluding promoting company Allianz Capital & Management Service Ltd) at the quarter ending March 2005 which decreased to 7.33% at the quarter ending June 2005. The name of Innovative Money Matters P.Ltd does not appear in the list of shareholders having more than 1% of shareholding in the company at the end of quarter ending September 2005. It is also observed that Geometric Securities & Advisory Pvt Ltd's shareholding in the company was 1.63% at the end of the quarter March 2005 but the name of Geometric securities does not appears in the list of shareholders having more than 1% of shareholding in the company at the end of quarter ending June 2005.
3.2.9 Further it is also noted that the company - Allianz does not seems to have disclosed the transactions by Innovative Money Matters P.Ltd to the exchange which is mandatory under the SEBI (Prohibition of Insider Trading) Regulations, 1992. The regulation requires company to disclose the change in shareholding in respect of persons holding more than 5% shares in a listed company. This fact coupled with substantial transactions by Innovative before and after the recommendations, transactions by promoters gives rise to suspicions of complicity between the company, promoters and Innovative Money Matters P.Ltd. This needs to be examined further.
3.3. Capital Hotels and Development Ltd 3.3.1 Shri Dua has published a research analysis of the scrip Capital Hotels and Development Ltd on August 03, 2005 giving Buy recommendation with in one year perspective. The closing price of the scrip on August 02, 2005 was Rs. 5.63/ 3.3.2 Capital Hotels and Development Ltd is a Delhi based company. It is engaged in the business of construction and housing. The face value of the scrip is Rs. 2/each share. From the price volume details available with the exchange it was noted that the company shares was thinly traded prior to month of July 2005. The average volume traded for the month of June 2005 was 17,087 shares and the highest closing price of scrip was Rs. 3.24 and lowest price was Rs. 1.84. The average volume traded for the month of July and august 2005 were 25305 and 213916 shares respectively.
3.3.3 Transactions data for the trading in scrip for the period during June 2005 - September 2005 by the 21 related clients were sought from exchange. It was seen that in this scrip, a total of 9 among the 21 clients have transacted during the period of examination. The major broker through which these clients have traded in the scrip was Integrated Masters Securities Ltd.
3.3.4 From the following table it may be observed that the even though the Shri Dua has given a buy recommendation these group associated with them has sold shares in large quantities. It also has been noticed that it constitutes a major part of exchange volume.
3.3.5 The transactions details prior to and post recommendation are tabulated below:
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Client Name Buy Sell
quantity quantity
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June 2005-August 02, 2005
1. Srs Vijay Sales P.Ltd. 50000 50000
2. Ganga Infin Pvt Ltd. 13530 13530
3. Camphar Sec & Adv Pvt Ltd. 51501 6646
4. Consolidated Securities Ltd. 89951
5. Geometric Securities 47220 22984
6. JKC Leasing & Sec. Ltd. 1000 1000
7. Manoj Dua 500 500
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Total 48720 184611
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August 03, 2005 -September 2005
1. Camphar Sec & Adv Pvt. Ltd. 1 44856
2. Consolidated Securities Ltd. 66800
3. Sparrow Marketing P.Ltd. 40188 40191
4. Geometric Securities 8000 35316
5. Srs Vijay Sales P.Ltd. 5900 5900
6. Ganga Infin Pvt Ltd 3270 3270
7. Latika Dua 8000
8. Manoj Dua 2500
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Total 67859 196330
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Grand Total 116579 380941
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3.3.6 From the table above it may be noted that even though Shri Dua has given a buy recommendation, the associated entities has sold shares in the scrip. It is further significant to note that these entities have accumulated some shares prior to the recommendation given by Shri Dua. During June - September 2005 these entities had bought 1.16 lacs shares and sold 3.8 lacs shares. Prior to the recommendation given by Shri Dua these entities has bought 48720 shares and sold 1.8 lacs shares. During post recommendation (August 03, 2005 -September 2005) period these entities had bought 67859 lacs shares and sold 1.96 lacs shares.
3.3.7 It is further pertinent to note that buy recommendation was given for a one year perspective. However, curiously, sale transactions by related entities have taken place immediately after the recommendation in large quantities. It is further noted that these entities have some shares accumulated prior to the recommendation given by Shri Dua.
3.3.8 Shareholding pattern of the company:
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Description as on June 30, 2005 September 30, 2005
Shareholders No of % of No of % of
Shares Holding Shares Holding
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Foreign 15900 0.23 33231 0.49
Institutions 80800 1.19 19514 0.29
Non Promoter
Corporate Holding 1429304 21.06 775549 11.43
Promoters 4314220 63.56 4116620 60.65
Public & Others 947806 13.96 1843116 27.15
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Total 6788030 100 6788030 100
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3.3.9 From the above table it is noted that the shareholding of promoter group has decreased substantially from 43.12 lacs (63.56 %) to 41.16 lacs (60.65%). Further it is noticed that the shareholding of non promoting corporate bodies has decreased from 21.06 % to 11.43% at the quarter ending September 2005. Shri Gaurav Mittal, director of the company has sold its complete shareholding 109000 (1.61%) during the quarter ending September 2005.
3.4. Season Furnishing Ltd 3.4.1 Shri Dua had published a research analysis of the scrip Season Furnishing Ltd on 30 Aug 2005 giving Buy recommendation. The closing price of scrip on August 29, 2005 was Rs.19.6/ 3.4.2 Season Furnishing Ltd is a Delhi based company. It is in the business of textiles. The face value of the scrip is Rs10/- each share. From the price volume details available with the exchange it was noted that the company shares were thinly traded prior to month of July 2005. The average volume traded for the month of May and June 2005 was 28630 and 133625 shares respectively.
3.4.3 The trade data for the scrip for the period during June 2005 -September 2005 by these 21 clients were sought from the exchange. It was seen that in this scrip, a total of four among the 21 clients have transacted during the period of examination. The major broker through which these clients have traded in the scrip was Integrated Masters Securities Ltd.
3.4.4 From the following table it may be observed that the even though Shri Dua has given a buy recommendation, the group associated with him has sold shares in large quantities. Transactions details prior to and post recommendation are given below:
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Client Name buy Sell
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June 2005-August 29, 2005
Sparrow Marketing P.Ltd. 58272
Srs Vijay Sales P.Ltd. 39639 58272
Geometric Securities 2450 200
Ganga Infin Pvt Ltd 37649
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Total 138010 58472
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August 30, 2005 -September 2005
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Ganga Infin Pvt Ltd 37649
SRS Vijay Sales P.Ltd. 33575 79687
Geometric Securities 2250
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Total 33575 119586
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Grand Total 171585 178058
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3.4.5 From the table above it may be noted that even though Shri Dua has given a buy recommendation, the associated entities has sold shares in the scrip.
3.4.6 Shareholding Pattern of the company:
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Description as on June 30, 2005 September 30, 2005
No of % of No of % of
Shares Holding Shares Holding
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Foreign Shareholding 0 0.00 0 0.00
Institutions 34912 0.65 43863 0.85
Govt Holding 35100 0.66 0 0.00
Non Promoter
Corporate Holding 1932439 36.09 1534582 29.83
Promoters 1182800 22.09 739100 14.37
Public & Others 2169249 40.51 2826355 54.95
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Total 5354500 100 5354500 100
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3.4.7 From the above table it is noted that the shareholding of promoter group has decreased substantially from 11.8 lacs (22.09%) to 7.3 lacs (14.37%), a significant decline of shareholding by the promoters. Further it is noticed that the shareholding of non promoting corporate bodies has decreased from 36.09 % to 29.83% at the quarter ending September 2005. Integrated Masters Securities Ltd (broking firm) was holding 533771 shares (9.97%) at the end of the quarter June 2005. The name of Integrated Masters Securities Ltd does not appear in the list of the shareholders holding more than 1% shares in the company at the quarter ending September 2005. It is also observed prima facie that P. S Tandon, Director of Dyna Cables Ltd wherein Shri Lalit Dua is also Director appears in the list of shareholders with more than 1% at the quarter ending June 2005. This name does not figure in the list at the end of quarter September 2005.
3.5. Jhunjhunwala Vanaspati Limited 3.5.1 Shri Dua had published a research analysis of the scrip Jhunjhunwala Vanaspati Limited on July 01, 2005 giving Hold recommendation and the recommended price was Rs.32/- share.
3.5.2 Jhunjhunwala Vanaspati Limited is a Delhi based company. It is engaged in the business of finance and investment. The face value of the scrip is Rs.10/- each share. From the price volume details available with the exchange it was noted that the company shares was thinly traded prior to month of May 2005. The average volume traded for the month of April and May 2005 was 20132 and 35890 shares. In June 2005 the average trading volume were 117186 shares.
3.5.3 The trade data for the scrip for the period during June 2005 -September 2005 by these 21 clients were sought from exchange. It was seen that in this scrip, a total of 9 among the 21 clients have transacted during the period of examination. The major broker through which these clients have traded in the scrip was Integrated Masters Securities Ltd 3.5.4 Transactions details prior to and post recommendation:
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S.No. Name of Clients Buy Sell -------------------------------------------------------------- June 2005- June 22, 2005 1. Dyna Cable Ltd. 500 2. Geometric Securities 9475 3921 -------------------------------------------------------------- Total 9975 3921 -------------------------------------------------------------- June 23, 2005- September 2005 -------------------------------------------------------------- 1. B.R. Financial Serv.P.Ltd. 3950 3950 2. Camphar Sec & Adv Pvt. Ltd. 34400 3. Consolidated Securities Ltd. 1689 4689 4. Dyna Cable Ltd. 500 5. Geometric Securities 3697 69265 6. Lrs Portfolio & Adv. Serv. Ltd. 2582 137282 7. Lalit Dua 2000 8. M/S.L. D. Investments Ltd. 2100 9. Manoj Dua 500 -------------------------------------------------------------- Total 16518 250086 -------------------------------------------------------------- Grand Total 26493 254007 --------------------------------------------------------------
3.5.5 From the table above it may be noted that even though Shri Dua has given a buy recommendation, the associated entities has sold shares in the scrip. It is further significant to note that these entities have accumulated some shares prior to the recommendation given by Shri Dua. During June - September 2005 these entities had bought 26493 shares and sold 2.5 lacs shares. Prior to the recommendation given by Shri Dua these entities has bought 9975 shares and sold 3921 shares. During post recommendation (June 23, 2005 - September 2005) period these entities had bought 26493 shares and sold 2.54 lacs shares.
3.6. Rama Paper Mills Ltd 3.6.1 Shri Dua LRS Research has published a research analysis of the scrip Rama Paper Mills Limited on May 18, 2005 giving HOLD recommendation and the recommended price was Rs.36/- share.
3.6.2 Rama Paper Mills Limited is a Uttar Pradesh based company. It is engaged in the business of Paper manufacturing. The face value of the scrip is Rs.10/each share. From the price volume details available with the exchange it was noted that the company shares was thinly traded prior to month of May 2005.
3.6.3 The trade data for the scrip for the period during April 2005 -August 2005 by these 21 clients were sought from exchange. It was seen that in this scrip, a total of 5 among these 21 have transacted during the period of examination. The major broker through which these clients have traded in the scrip was Integrated Masters Securities Ltd 3.6.4 Transactions details prior to and post recommendation:
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S.No. Name Of Entities Buy Sell
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April 2005 - May 19, 2005
1 Camphar Sec & Adv Pvt Ltd 18600 9500
2 Dyna Cable Ltd. 32500
3 Geometric Securities 26500 23500
4 Lrs Portfolio & Adv.Serv.Ltd. 2500 100
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Total 80100 33100
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May 19, 2005- August 2005
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1 Camphar Sec & Adv Pvt Ltd 26000 40400
2 Consolidated Securities Ltd. 56400 14100
3 Geometric Securities 110600 89300
4 Dyna Cable Ltd. 2000
5 LRS Portfolio & Adv. Serv. Ltd. 4000
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Total 193000 149800
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Grand Total 99400 182900
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3.6.5 From the table above it may be noted that even though Shri Dua has given a buy recommendation, the associated entities has sold shares in the scrip. It is further noted that these entities has accumulated shares prior to the recommendation given by Shri Dua.
3.6.6 BSE website does not give the distribution schedule of the company from March 2004 onwards. It appears that the company has not filed its distribution schedule to the exchange after March 2004. Thus the company seems to have violated the listing agreement.
3.7. Triton valves Ltd 3.7.1 Shri Dua has published a research analysis dated July 18, 2005 for the scrip Triton Valve Limited indicating it is good scrip in near future by stating "we are of the opinion that Triton valves would eventually attain industry composite P/E level .Thus even without any triggers the present growth, earnings, profitability itself should take it to the valuation a market leader should command which means doubling of the price from current levels". The closing price of scrip was Rs. 1323.55 on July 15, 2005.
3.7.2 Triton Valve Limited is a Karnataka based company. It is engaged in the business of Auto Ancillary manufacturing. The face value of the scrip is Rs.10/- each share. From the price volume details available with the exchange it was noted that the company shares was thinly traded prior to month of May 2005. The average volume traded in scrip for the month of April 2005 and May 2005 were 221 and 142 shares respectively. Increase in price and volume was observed during the month of June and July 2005. The average volume of scrip for these two months was 2724 and 4554 shares.
3.7.3 The trade data for the scrip for the period during June 2005 -September 2005 by these 21 clients were sought. It was seen that in this scrip, a total of 4 among the 21 clients have transacted in the scrip during the period of examination. The major broker through which these clients have traded in the scrip was Integrated Masters Securities Ltd 3.7.4 Transactions details prior to and post recommendation:
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S.No. Name Of Entities Buy Sell ------------------------------------------------------------- June 2005 -July 17, 2005 ------------------------------------------------------------- 1 Camphar Sec & Adv Pvt Ltd 244 50 2 Consolidated Securities Ltd. 6000 3 Geometric Securities 1682 1428 ------------------------------------------------------------- Total 7926 1478 ------------------------------------------------------------- July 18, 2005- September 2005 ------------------------------------------------------------- 1 Camphar Sec & Adv Pvt Ltd 243 2 Consolidated Securities Ltd. 6000 3 Geometric Securities 553 758 4 LRS Portfolio & Adv. Serv. Ltd. 97 97 ------------------------------------------------------------- Total 650 7098 ------------------------------------------------------------- Grand Total 8576 8576 -------------------------------------------------------------
Other then the above transactions during the post recommendation period it is observed that Shri Lalit Dua, Latika Dua and Manoj Dua has bought 100, 40 and 50 shares respectively. It is pertinent to note that these related entities has bought shares prior to the recommendation and sold shares during the post recommendation period.
3.7.5 In the scrip, no substantial change has been noticed in the shareholding pattern of the promoters of the company.
3.8. ANG Export Ltd 3.8.1 Shri Dua has published a research analysis of the scrip ANG Export Ltd on July 11, 2005. It is pertinent to note that this research report does not give any specific Buy/Sell/Hold recommendations. The closing price of the scrip on July 08, 2005 was Rs.61.2/-. However, in the subsequent research reports, wherein summary of previous research reports were given, Shri Dua has recommended "to book profit in the scrip and switch to Samtex".
3.8.2 ANG Export Ltd is a Delhi based company. It is engaged in the business of Auto Ancillary manufacturing. The face value of the scrip is Rs.10/- each share. From the price volume details available with the exchange it was noted that the company shares was thinly traded prior to month of May 2005. The average volume traded in scrip for the month of April 2005 and May 2005 were 3447 and 9094 shares respectively. Increase in price and volume was observed during the month of June and July 2005. The average volume of scrip for these two months was 20931 and 30614 shares.
3.8.3 The trade data for the scrip for the period during July 2005 -September 2005 by these 21 clients were sought from exchange. Two clients have transacted in this scrip during the period of examination. The major broker through which these clients have traded in the scrip was Integrated Masters Securities Ltd It is observed that Consolidated Securities Ltd has sold 65,707 shares on July 08, 2005 prior to the recommendation by Shri Dua. As indicated earlier the recommendation in the scrip was booking profit by selling ANG export and moving to Samtex; however Consolidated Securities has not purchased shares of Samtex instead it sold in substantial quantity in the scrip. This has been brought out in the earlier section of the order.
Information received from Shri Dua 4.1 During the course of preliminary inquiries, information was sought from Shri Dua and LRS Portfolio seeking details of their transactions as well as those of their associate entities in the scrips for which recommendations were given by Shri Dua.
4.2 Though he reportedly gave details in respect of shares held and transacted by him and his associates, the table herein below as reproduced from the reported numbers would indicate that he did not give the details of associated entities as claimed.
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No. Scrip Name Lalit Dua Comments/ No. of Shares Held at
Recommendation The Time Of
recommeRndations
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1. Jhunjhunwala Major player in Vanaspati 134700 Vanaspati
2. Rama Paper Mills Turn around company in paper 18800
3. Capital Hotel & Housing company with focus on 0 Development pilgrimage tourism
4. Samtex Fashions Ltd. A diversified company with 0 manufacturing facilities of garments and rice 5. ANG Export Fairly priced 0
6. Season Furnishing Ltd. Emerging retail storey in home 0 textiles
7. Allianz Sec. Ltd. A Merchant Banking Company with 0 focus on fee base income
8. Samtex Fashions A diversified company with 0 manufacturing facilities of graments and rice
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As brought out earlier, associated entities were holding substantial shares in the companies in which recommendations were made. Shri Dua was a director in several such associate entities such as Dyna Cables, Consolidated Securities, JKC Leasing and Securities Ltd., B R Financial Ltd, LD Investment Ltd and LRS Securities etc. Thus, Shri Dua has attempted to mislead the investigation by providing incorrect information. Further, it is also indicative of an attempt to conceal information and hamper investigation
5. Conclusion 5.1. The findings of the preliminary analysis as elucidated bring out a carefully crafted and well orchestrated plan by Shri Lalit Dua to mislead unsuspecting investors and gain at their expense. The plan has been executed in 3 stages. Firstly, Shri Dua and his associate entities build up positions in low capital /penny stocks of non descript companies which are infrequently traded and devoid of any investor interest. This position build up is done either by purchasing shares from the promoters of the company or from the market at low prices. Thereafter, buy recommendations are given by Shri Dua on the stock complemented by some favourable /forward looking statements on the performance and future prospects of the company. This generates interest in the trading of such stocks and induces lay investors to commence transactions in such stocks. This lead to upward movement in the price and volume of such stocks. Finally, the associate entities start offloading stock at the higher prices created as a result of induced demand for the penny stocks.
5.2. A clearly negative correlation is noticeable between the trading pattern of Shri Lalit Dua and his associate entities and the investment recommendations given by him. While Shri Dua has been advising the market to buy a stock, his associated entities have sold the stock in large quantities. This indicates an obvious attempt to hoodwink the investors through investment recommendations and make unfair gains at the cost of unsuspecting investors. The preliminary findings thus bring out a prima facie case of violation of SEBI (Prohibition of Fraudulent and Unfair Trade practices relating to securities market) Regulations, 2003.
5.3. Another important finding is the role of the promoters of the company in the scheme of things. In the case of Samtex Fashion Ltd., substantial transactions in the nature of cross deals between the promoter of the company and entities relating to Shri Dua were noticed. Additionally, in other scrips, substantial decline of promoter's shareholding was also observed. In some of these companies, it was noticed that the majority of entities related to Dua were major shareholders in the companies prior to the recommendation and then a sharp decline in their shareholdings was observed, post recommendation. This issue needs to be looked into further to examine any possible nexus between the promoters of such companies and Shri Dua/ associate entities.
5.4. Further, two companies under question namely - Samtex Fashion Ltd and Allianz securities Ltd have not made disclosures as required under the SEBI (Prohibition of Insider Trading) Regulations, 1992. Consolidated Securities has not disclosed its substantial sales in Samtex and Innovative Money Matters P.Ltd in Allianz Securities Ltd 5.5. SEBI has prescribed certain disclosure requirements for the intermediaries through its regulations to take care of such situation as detailed above. The regulations require that the intermediaries or their employees shall not render directly or indirectly any investment advice about any security in the publicly accessible media, whether real time or non-real-time, unless a disclosure of his long or short position in the said security has been made, while rendering such advice. While making investment recommendations on securities in the said website, Shri Dua has not disclosed his interest or the interest of his family members in the securities. Significantly, during the course of preliminary inquiry, despite specific instructions, Shri Dua did not disclose the details of the portfolio of associate entities. This indicates an obvious attempt to conceal information and hamper investigation as well as to defeat the purpose of the regulations.
5.6. In view of the fact that Shri Dua is a director of LRS Portfolio & Advisory Ltd., which is a SEBI registered Sub broker with NSE, the intermediary has violated clause B(7A) of the Code of Conduct for Stock Brokers as given in Schedule III read with Regulation 15 of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992.
5.7. It is apparent that Shri Dua through LRS Portfolio is purveying information to the public which he himself does not appear to believe to be true. The only possible ulterior motive for Shri Dua to employ such an artifice appears to be for making unfair gains for himself and associated entities at the cost of lay investors. The act of Shri Dua and his associate entities thus is in violation of Regulation 4(2) (f) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, which reads as follows:
Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely... publishing or causing to publish or reporting or causing to report by a person dealing in securities, any information which is not true or which he does not believe to be true prior to or in the course of dealing in securities.
5.8. The aforesaid provisions of both the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 are important provisions which are aimed at ensuring market integrity and protecting the lay investors. If Shri Dua or any of his associated entities could brazenly breach them with unfailing regularity, it bodes ill for market integrity and presents an hazardous situation for the investors.
SEBI is initiating formal investigation into the matter. In the meanwhile, having regard to the finding of the preliminary analysis, it is apprehended that lay investors could be further misled, particularly having regard to the present state of the market. SEBI being the regulator has the responsibility to expedite proactive measures to prevent such persons from further misleading the investors and compromising the integrity of the market. Accordingly, having regard to the materiality of circumstances of the case, I feel that immediate action is warranted to safeguard the interest of the investing public, before things become intractable.
ORDER 6.1. Therefore, in exercise of the powers delegated upon me by SEBI Board in terms of Section 19 of the Securities and Exchange Board of India Act 1992 read with Section 11B, 11(4)(b) and 11D, I hereby, pending investigation and passing of final order, by way of ad interim, ex-parte order, direct Shri Lalit Dua to cease and desist from giving any recommendations about any investment in the securities market in any public media which amounts to violation of Regulation 4(2)(f) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
6.2. I further direct LRS Portfolio & Advisory Services Ltd to cease and desist from rendering any advice directly and indirectly any investment advice about any security in the publicly accessible media amounting to violation of clause B(7A) of the Code of Conduct for Sub Brokers laid down in Schedule III read with Regulation 15 of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992.
6.3. The promoter associated entities of Samtex Fashions Ltd namely Anju Mittal, Rama Mittal, Suresh Goel and Rachana Goel and Sincerely Finance & Investment P Ltd be prohibited from buying, selling or dealing in any manner in the shares of Samtex Fashions Ltd till further orders are passed by SEBI.
6.4. I also take this opportunity to caution investors to take informed investment decisions without being influenced by such recommendations given in the public media.
6.5. The website www. indiainfoline.com being a website with a wide reach and especially belonging to a SEBI registered stock broker as well as Portfolio Manager and Merchant banker, has a responsibility cast on them for exercising due care and diligence to ensure that persons with proven credentials of giving fair and truthful information and analysis alone are allowed to give advise on the portal so that the portal is not misused by persons giving advice purely on considerations of personal gains.
6.6. The above order shall take effect immediately. However, the entities/persons against whom this order is issued may file their objections, if any, to this order within 15 days from the date of this order and, if they so desire, avail themselves of an opportunity of personal hearing at the Securities and Exchange Board of India, Head Office, First Floor, Mittal Court B Wing, Nariman Point, Mumbai 400 021 on a date and at a time to be fixed on a specific request, to be received in this behalf from the entities/persons within 15 days from the date of this order, in which case their representations shall be considered and a final view taken. If they do not respond within such stipulated time, it shall take final effect against them.
This order shall come into force with immediate effect.