TaxTMI 
TaxTMI 
2016 (7) TMI 1711
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....the traded volume and price of the shares of Pine Animation Limited {formerly known as Four K Animation Limited and hereinafter referred to as "Pine"} on Bombay Stock Exchange Limited ("BSE") during the period from May 22, 2013 to January 30, 2015 (hereinafter referred to as "Examination Period"), Securities and Exchange Board of India ("SEBI") undertook a preliminary inquiry in the dealings in the said scrip. 2. Upon preliminary examination, it was prima facie observed that Pine and persons in charge of its affairs created a facade of preferential issue of equity shares of around Rs.24.7 crore in order to provide fictitious long term capital gains ("LTCG") to Pine's preferential allotees and Promoter related entities (i.e. entities to whom Pine's promoters transferred their shares in physical form) so as to convert their unaccounted income into accounted one. It was observed that after the release of compulsory lock-in period, the preferential allotees and the Promoter related entities were provided exit at a high price by the entities related/connected amongst themselves and with Pine (hereinafter referred to as "Exit Providers"). In the process Exit Providers and allotees art....
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.... f) Between June 20, 2013 and December 16, 2013, ("Patch 2") the scrip was traded only on 13 trading days and the price moved from Rs. 1006 (unadjusted and Rs. 100.6 adjusted to share split) to Rs. 910 (unadjusted and Rs. 91 adjusted to share split). g) Thereafter, there was a huge increase in the traded volume during the period December 17, 2013 to January 30, 2015 ("Patch 3") and the entities connected / related, directly or indirectly, to Pine, started providing hugely profitable exit to the preferential allotees and Promoter related entities. h) Such sharp rise in price and volume of the scrip was not supported by any acceptable market factor such as fundamentals, trading history, corporate announcements, etc as discussed in the interim order but was on account of non-genuine and manipulative trading in the scrip by certain entities. 3. In this backdrop, SEBI, vide an ad interim ex-parte order dated May 08, 2015 (hereinafter referred to as "interim order "), restrained Pine along with other 177 entities, including 26 entities mentioned above (hereinafter referred to as "Noticees"), from accessing the securities market and further prohibited them fro....
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....eration at this stage is whether the interim directions, issued against the Noticees vide the interim order, need to be confirmed, vacated or modified in any manner, during pendency of investigation in the matter. 7. The facts and circumstances of the instant case as brought out in the interim order prima facie show the modus operandi employed by the company, its directors, its promoters, Preferential Allottees, Promoter related entities and Exit Providers, wherein the company, in nexus with the preferential allottees made façade of preferential allotment and the Promoters of the company transferred their holding to the entities belonging to Promoter related entities. After the expiry of the lock-in period, Exit Providers provided the exit opportunity to preferential allottees and Promoter related entities by buying the shares of Pine at artificially increased prices. In the whole process, entities of Exit Providers provided a hugely profitable exit to the preferential allottees and Promoter related entities. Hence, preferential allottees and Promoter related entities with the aid of the Exit Providers misused the stock exchange mechanism to exit at a high price in order ....
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....ith law, would be taken after completion thereof. As prima facie found in the interim order, Pine, its promoters, its directors, preferential allottees, Promoter related entities and Exit Providers have acted in connivance for implementation of dubious plan, device and artifice that has led to the misuse of stock exchange mechanism to artificially increase price and volume of the scrip to provide illegitimate gains to the preferential allottees and Promoter related entities in order to claim LTCG benefits that has not only eroded the market integrity but has also been detrimental to the interests of investors who might have been lured to invest in the scrip due to such manipulative and fraudulent trading in the scrip and price movement. I, therefore, do not find any reason to revoke or modify the directions of the ad interim ex parte order dated May 08, 2015 in the matter of Pine Animation Limited against the Noticees. 11. I, therefore, in exercise of the powers conferred upon me under section 19 of the SEBI Act, read with sections 11(1), 11(4) and 11B thereof, hereby confirm the directions issued vide the ad interim ex-parte order dated May 08, 2015 against the following entiti....