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Dipti Kirit Parekh has been banned for two years with immediate effect from buying and selling in the securities market for cornering the retail investor portion in the IPO of Spice Communications Ltd (SCL).
SEBI found Parekh assisting in creating fictitious applicants, engineering applications in the retail investor category and subsequently, ensuring transfer of shares allotted to her own demat account, thereby, cornering shares meant for retail investors. SEBI also found that Parikh had made an unlawful gain of over 1.28 lakh shares.
The matter came to light when SEBI observed that certain entities who had applied for and were allotted shares in the retail category in the SCL IPO immediately transferred the shares upon listing, to certain operators, thereby enabling cornering of such shares.
The 11.31-crore share SCL IPO, which opened for subscription on June 25, 2007 and closed on June 27, 2007, was subscribed 37 times (3.83 times in the retail investor category). The scrip was listed on the BSE on July 19, 2007.
SEBI found Parekh cornering the retail investor portion by assisting in creating false applicants, managing and funding applications in the IPO, receiving the shares allotted to the applicants through off–market transfers and selling them in the open market making unlawful gains.
Parekh appealed to the Securities Appellate Tribunal against SEBI’s order dated May 15, 2013. On January 31 this year, SAT directed SEBI to pass a fresh order on merits within two months while continuing SEBI’s ban for that period.
SEBI also found that Parekh facilitated and managed the responses/replies provided to SEBI by certain allottees. “Further, the inconsistencies in the stance taken by Parikh in the instant matter reflect a clear intention to escape liability arising out of the violations stated in the show cause notice,” said SEBI. Finding that Parikh had violated its regulations on Prohibition of Fraudulent and Unfair Trade Practices, SEBI banned Parekh for two years. The ban would include the term already served by Parekh.
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