Sebi bans Snowcem from market for 2 yrs

Market regulator Securities and Exchange Board of India (Sebi) has banned Mumbai-based paint major Snowcem India Limited (SIL) from accessing the capital market and dealing in securities for two years for its alleged role in price manipulation of the company’s scrip. ‘‘SIL, acted in concert with other entities like Kosha Investments Limited (KIL) and an investor client Sourabh Bora (SB) among others, to create an artificial and false market during June to August 1999,’’ Sebi whole-time director A. K. Batra said in his order, which came into effect from December 5. Snowcem supported these entities in carrying out substantial transactions in its scrip by providing financial support, thereby aiding and abetting price manipulation of the scrip, he said, adding, such acts were violative of Sebi’s Provisions (prohibition of fraudulent and unfair trade practices) 1995, and not in accordance with sound market principles. Snowcem India came out with a public issue in 1995 at a price of Rs 100, including a premium of Rs 90. The shares were listed on BSE, NSE, Madras, Delhi and Ahmedabad stock exchanges. A substantial spurt in the scrip price was noticed at both BSE and NSE during June to August 1999 along with rise in volumes, when it was observed that SIL scrip was not very liquid. After seeking trading details, Sebi found that from an average daily volume of 12,521 shares between March-May 1999, the volumes started rising and were in the range of 60,000-65,000 shares per day till August 1999. NSE conducted an internal investigation in the SIL counter for the period June 3, 1999 to August 10, 1999 and submitted its report to Sebi. It was observed that some entities associated/close to ‘SIL’ had been actively involved in trading of its shares during the relevant period of time, resulting in an unusual spurt in prices and traded volumes. It was also observed that in some settlements, their contribution was as high as over 90% of the total market activity. The clients, brokers as well as the personnel of SIL were asked to furnish various details like share transfer records, book closure, major public announcements made by SIL during the calendar year 1999. Details of loans, advances, inter-corporate deposits availed by SIL from the private parties, individuals, corporates and also sanctioned by it to various parties were collected along with details of the flow of funds from the bank accounts of SIL to different entities. It was found that the company had re-issued forfeited shares which were then allotted to one Sourabh Bora whose name along with KIL.