Order in the matter of Prime Property Development Corporation Ltd.
Securities and Exchange Board of India (SEBI) vide order dated September 29, 2005 has issued the following directions in the matter of Prime Property Development Corporation Ltd.
a. The promoters and directors of the company viz. Mr Padamshi L Soni. Mr Manish P Soni, Vishal P Soni, Prakash D Shah, Siraj M Somji, Nitin R Kilawala and Viren C Mikshita, Siraj M. Somji, Shabbir M. Somji, Dilshad S. S. and Shainaz S. S. be prohibited from buying, selling or dealing in any manner in the shares of the company till further orders are passed by SEBI
b. That the clients viz Pratap Sanghvi, Hitesh Vora, Manherlal Vora, Sandeep Pravin Shah, Chetan Mehta, Amit Pandya, Mehta Consultancy, Nisha Mehta, Jaswantrai Mehta, Dhanlaxmi Mehta and Jaswantrai Mehta are hereby directed not to buy, sell or deal in securities of Prime Property developments Corporation Ltd. directly or indirectly, till further directions in this regard.
c. That the Stock Brokers viz., Indiabulls Securities Ltd. (formerly Orbis Securities Pvt Ltd), Mansukhlal M. Upadhyay, Harikishan Hiralal, Ajmera Associates Pvt. Ltd and Ventura Securities Ltd are hereby directed not to buy, sell or deal in securities of Prime Property Developments Corporation Ltd. on behalf of the promoters, directors and clients mentioned at para No. (a) and (b) hereinabove, directly or indirectly, till further directions in this regard.
d. The company is prohibited from accessing capital markets till further orders are passed by SEBI.
All the above directions shall take effect immediately and shall be in force until further orders.
The above order has been passed by Shri G.Anantharaman, Whole Time Member, SEBI in the following context:
Sudden spurt in price and trading volume of certain companies in a short period of time often referred to as “mid cap” or “small cap” companies have been engaging the attention of SEBI and the stock exchanges for some time. It has also been noticed that several such companies have been making a flurry of seemingly favourable price announcements detailing proposed corporate developments, status of business, projects and status thereof. It was also noticed that several such announcements are not mandated under law. It has further been noticed that curiously the promoter shareholding in several companies has decreased in the backdrop of such announcements indicating that promoters have taken advantage of price rise and benefited from it. Trading in such companies has been under the surveillance of SEBI and the stock exchanges to determine whether the trading volumes and price rise have been the result of unfair trade practices or market manipulation. .
One such company whose shares have shown a significant increase in prices as well as trading volumes in a short period of time is Prime Property Development Corporation Ltd. (the company). The shares of the company were listed on the BSE in July 1995. The trading history of the shares of the company showed that shares of the scrip were thinly traded. During the period January to December 2004, trading took place only on 136 days with a number of trades in range of minimum one to maximum number of trade 68. The share price moved in a range of Rs.13 to Rs.29 while correspondingly, the volumes were in the range of two shares to 22900 shares per day.
For the period, January to June 2005, a largely similar trading pattern was observed; which was sporadically broken by isolated and infrequent trades at levels of Rs.25 to 35. High volumes were also observed on these infrequent trading days. The share price thereafter moved by quantum jumps from range of Rs. 30 in June 2005 to levels of Rs. 310 in September 2005. This phenomenal jump of around 900 % was seen over a small period of only around 60 trading days. The applicable circuit filter in the scrip was 10%, which was revised to 5% on 8th July 2005. The scrip had hit the upper circuit filter limit on almost all days in July / August 2005. The scrip was transferred to T group w.e.f. July 15, 2005. A sharp rise in volumes traded was also noticed during this period. The volume traded in the scrip was 500 shares as on June 20, 2005 and touched an incredible high of 3,89,866 shares on August 03, 2005. Thereafter, the average volume traded continued to be in the range of more than 1,00,000 shares per day. During this time, the company also issued a flurry of announcements. The company has announced “completion of prestigious projects” in July 2005 and then in August 2005. Further, it issued announcements of several expected changes in company equity structure and business operations. It is pertinent to note that the share price which had reached levels of Rs. 53 in the first week of July 2005 subsequently sharply burgeoned to levels of Rs. 300 in the background of several announcements detailing proposed business plans and completion of projects as well as changes in the equity structure. It was further observed that promoters & directors had undertaken transactions in the shares of the company during the period June to September 2005 and have made a net sale of more than nine lacs of shares. In view of the price movement, circuit filters have also been imposed by the stock exchanges on the trading in the scrip. With effect from March 1, 2005, the circuit filter was reduced from 20% to 10% and thereafter, as recently as July 8, 2005, the circuit filter was reduced from 10% to 5%.
The circumstances as elucidated above namely - meteoric increases in price and trading volume of the shares, the flurry of market friendly announcements issued by the company and transactions by the promoters and directors of the company during this period warranted an immediate investigation by SEBI. While the inquiry is in progress, based on findings of the preliminary inquiry, SEBI has issued the above directions.
The full text of the Order is available on the website: www.sebi.gov.in
September 30, 2005