Sebi has imposed a penalty of Rs 37 lakh on Cavalier Securities Ltd for failing to make a public announcement while holding more than 15 per cent stake in finance company,Gujarat Arth Ltd (GAL) and fraudulently offloading its shares in the market. As per Sebi norms,no acquirer shall have 15 per cent or more of the voting rights in a company,unless the acquirer makes a public announcement about the purchase. In its order dated August 31,2012,Sebi said,"From the foregoing it is established beyond doubt that the Noticee (Cavalier Securities) received large quantities of shares of GAL through offmarket transfers from the promoters,Person acting in concert (PACs) and other shareholders following the misleading announcements made by the company." "The Noticee fraudulently offloaded the shares so received in the market. The Noticee did not make public announcements or disclosures upon acquisition of shares,as required under the SAST Regulations and Insider Trading Regulations so also on the disposal of the same," Sebi added. ". impose a monetary penalty of Rs two lakh under Section 15 A (b),Rs 25 lakh under Section 15H and Rs 10 lakh under Section 15 HA of the SEBI Act,thus a total of Rs 37 lakh on the Noticee (Cavalier Securities)," the order said. A probe by Sebi of irregularity in the trading in the shares of GAL had revealed that the company's unaudited quarterly results for month ending December 2003 had shown manifold increase in the turnover and net profit. The promoters and PACs of GAL had transferred their entire shareholding in the company to various entities including Cavalier Securities Ltd (which is a member of the Ahmedabad Stock Exchange) in off-market deals in the month of October 2003 who in turn offloaded the shares into the market. It was observed by Sebi that Cavalier securities had acquired over 15 per cent of the share capital of GAL in two instances during the investigation period and later offloaded them in the market. Further,it did not make a public announcement as required under the norms. The adjudicating officer was appointed to look into the allegations in April 2009 where after the entity was granted personal hearing in May 2012. However,the firm did not submit any reply to Sebi. In its order,the regulator has observed that Cavalier securities had started trading GAL's shares after the company had announced its unaudited results on January 14,2012. Sebi found that Cavalier Securities had bought 1.11 lakh shares and sold 6.10 lakh shares and further sold 5.32 lakh shares from January 15 to January 19,2004. Sebi noted that Cavalier Securities was not holding any shares prior to September 2003 but its stake rose to 15.58 per cent when it bought 8.10 lakh shares in October 11,2003. Later,the entity further acquired another 13,000 shares and 8.32 lakh shares on October 21,2003 and October 23,2003,respectively,in GAL again crossing the threshold limit of 15 per cent. It was observed that Cavalier Securities failed to make any public announcement in both the instances.
