ADJUDICATION ORDER UNDER RULE 5 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 IN THE MATTER OF ADJUDICATION PROCEEDINGS AGAINST NOKIA INTERNATIONAL FINANCE PRIVATE LIMITED FOR FAILURE TO FURNISH INFORMATION AND TO COMPLY WITH THE SUMMONS ISSUED BY SEBI.

 

1.      Vide  order dated October 14, 2004 issued by the Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) I was appointed  as the Adjudicating Officer to inquire into and adjudge under Section 15I  of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the ‘SEBI Act’), the violation of Section 11C of the SEBI Act alleged to have been committed by Nokia International Finance Pvt. Ltd (hereinafter referred to as the noticee)  by not complying with the summons issued by SEBI seeking information regarding its dealings in the scrip of Sword & Shield Pharma Ltd. (hereinafter referred to as SSPL).   It is alleged that SEBI issued summons / letters number IVD/ID3/PKB/AA/SSPL/15380/2004 dated  July 14, 2004, and IVD/ID3/PKB/AA/SSPL/18558/2004 dated August 23, 2004, requiring the noticee to submit certain information in respect of its dealings in the scrip of  SSPL and also to personally appear before the investigating authority of SEBI. It is alleged that the noticee did not submit the information sought by SEBI.  Further, the noticee did not appear before the Investigating Authority as required by SEBI vide the summonses.  In view of the alleged non compliance of summons issued by SEBI, Adjudication Proceedings were initiated against the noticee.

 

NOTICE AND REPLY

 

2.      A notice no. A&E/BS/33253/2005 dated February 9, 2005 was issued to the noticee in terms of Rule 4 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as the “Rules”) seeking reply of the noticee as to why an inquiry should not be held against it in respect of the violations alleged to have been committed by it.

 

3.      It is noted that the noticee did not reply to the show cause notice. As the noticee failed to reply to the show cause notice, considering the facts and circumstances of the case it was decided that an inquiry should be held and the noticee was advised to attend the hearing scheduled on May 20,2005. 

4.      Shri. Samir Shah, Director of the noticee company attended the hearing on May 20, 2005 in respect of the inquiry and made the following submissions.

a ) We have submitted the information to SEBI in response to the summons.

b ) At present we do not have any papers as we have closed down the business since last three years

c) In response to the summons I appeared before the Investigation Authority on July 28, 2004 and my statement was recorded by the Investigative Authority. Subsequently  the details sought by SEBI was submitted to it. The said details were forwarded to SEBI through a courier service agency.

 

CONSIDERATION OF EVIDENCE AND FINDINGS

 

5.      The allegation against the noticee is that it failed to comply with the summons issued by SEBI.  It is noted that SEBI issued summons / letters IVD/ID3/PKB/AA/SSPL/15380/2004 dated July 14, 2004, and IVD/ID3/PKB/AA/SSPL/18558/2004 dated August 23, 2004,  requiring the noticee to submit the information sought by the Investigating Authority in connection with the investigations initiated by SEBI in the scrip of SSPL.   In this regard it is noted that vide the summons dated July 14, 2004, the noticee was advised to provide the information sought by SEBI and also it was advised to appear in person before the investigating officer on July 28, 2004 at the SEBI office.  It is observed from the records that the noticee appeared before the investigating authority on July 28, 2004 and the submissions made by the noticee was recorded by the investigating authority.  During the course of examination of the noticee by the investigating authority, the noticee had undertaken to provide certain details sought by the investigating authority by August 2, 2004.  It is noted that subsequently the investigating authority issued a letter dated August 23, 2004 to the noticee calling upon the noticee to furnish details regarding the date-wise trading done by it,  the demat statement pertaining to the trading and the bank statement pertaining to the trading.  The said details were required to be submitted to the investigating authority by August 30, 2004.  In this regard the noticee submitted that it had forwarded the details sought by SEBI through a courier service.  However, on perusal of the records it is noted that the investigating authority did not receive the said details.  With regard to the proof of submission of the details sought by the investigating authority, the noticee has stated that it has closed down its office since last three years and hence the old office records were not available. The said contention of the noticee is not acceptable.

6.      It is pertinent to note that the facts and circumstances of the case available on record that in response to the first summons issued by SEBI, the noticee appeared before the investigating authority and his statement was recorded by the investigating authority.  Subsequently certain details were sought by the investigating authority vide  letter dated August 23, 2004 and the noticee has stated that the information sought vide said letter was provided to SEBI.  It is pertinent to note that subsequently no other further details were sought by SEBI and no other letter was sent to the noticee.     

7.      In view of the above, considering the fact that the noticee had appeared for the investigating authority in response to the summons number IVD/ID3/PKB/AA/SSPL/15380/2004 dated July 14, 2004, it cannot be concluded that the noticee failed to comply with the summons dated July 14, 2004 issued by the investigating authority.  However, with regard to the details sought by the investigating authority vide letter dated August 23, 2004, the noticee has not produced any proof of submission of the said information and further on perusal of the records it is noted that no such information was received by the investigating authority.  In this regard Section 11C (3) of the SEBI Act empowers the investigating authority to require any person associated with securities market to furnish such information or produce such records as may be required by the authority.  Though it is contended by the noticee that it had submitted the necessary details / information sought by the investigating authority, no proof has been submitted by the noticee in this regard.  Further it is noted that no proof is available on record.  Hence it can be concluded with regard to the details sought by SEBI vide its letter dated August 23, 2004 no information was submitted by the noticee.

 

8.      In this regard, the provisions of Section  15A(a) of SEBI Act provides the following:

15A. Penalty for failure to furnish information, return, etc. : If any person, who is required under this Act or any rules or regulations made thereunder,“to furnish any document, return or report to the Board, fails to furnish the same, he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less”.

9.      In this regard, the provisions of Section 15J of the SEBI Act and Rule 5 of the Rules require that while adjudging the quantum of penalty, the adjudicating officer shall have due regard to the following factors namely;

 

a)                 the amount of disproportionate gain or unfair advantage wherever quantifiable, made as a result of the default

b)                 the amount of loss caused to an investor or group of investors as a result of the default

c)                  the repetitive nature of the default

 

10. It is noted that no quantifiable figures are available to assess the disproportionate gain or unfair advantage made as a result of the default.  Further, the amount of loss caused to an investor or group of investors also cannot be quantified on the basis of the available facts and data.  In this regard it is pertinent to note that as stated before, the noticee had appeared before the investigating authority of SEBI in response to the summons issued by SEBI.  With regard to the information/ details sought by SEBI vide letter dated August 23, 2004, on the basis of the evidence available on record it is concluded that the noticee failed to submit the same to the investigating authority.  Timely submission of information is very important in conducting investigation proceedings and non cooperation by an entity can be detrimental to the interest of investors and securities market However, on the basis of the facts and circumstances of the case and also considering the fact that the noticee had earlier complied with the summons dated July 14, 2004. issued by SEBI and taking into account the submissions made by the  noticee,  I am of the view that no penalty needs to be imposed on Nokia International Finance Limited in this matter.   

 

     ORDER

 

11. Considering the facts and circumstances of the case, though it is noted that Nokia International Finance Limited failed to submit certain information to the investigating authority of SEBI in response to the letter dated August 23, 2004 issued by SEBI, however taking into account the fact that Nokia International Finance Limited had earlier appeared before the investigating authority of SEBI, I am of the view that no penalty needs to be imposed on Nokia International Finance Limited in terms of the provisions of the Section 15A(a) of the SEBI Act.

12. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995, copies of this order are sent to Nokia International Finance Limited and to SEBI.   

 

 

PLACE: MUMBAI                                                    BIJU. S

 MAY  31, 2005                                                         ADJUDICATING OFFICER