Capital market regulator SEBI has barred Pan Asia Advisors and Arun Panchariya from the securities market for 10 years. They were found manipulating the market using structured transactions in global depository receipts (GDRs).
GDRs are receipts issued by companies to raise capital from overseas bourses and are issued against a specified number of shares held by a foreign depository/ custodian.
SEBI said Panchariya had been a repeat offender and fined for creating false and misleading appearance of trading in Alka and his involvement in publication of premature/ misleading positive announcements.
In September 2011, SEBI had barred 19 entities for GDR manipulation in an ex-parte interim order.
SEBI had received surveillance alerts on large-scale conversion of GDRs of seven companies — Asahi Infrastructure and Projects, IKF Technologies, Avon Corporation, K Sera Sera, CAT Technologies, Maars Software International and Cals Refineries — into equity and their eventual sale by FII sub-accounts within a short period of issue of GDRs.
The findings revealed prima facie evidence of a pre-arrangement between parties to transactions.
SEBI found evidence that Arun Panchariya was the ‘common denominator’ to every other party, be it the GDR issuing company, GDR subscriber, FII sub-account, bank, lead manager and the related counterparties.
The ex-parte interim order was confirmed by SEBI in January 2012.