Order in respect of M/s Yashika Holding Pvt. Ltd

WTM/RKA/ISD/64 /2012 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: RAJEEV KUMAR AGARWAL, WHOLE TIME MEMBER ORDER Under Sections 11(1), 11(4) and 11B of the Securities And Exchange Board of India Act, 1992 read with Regulation 11 of the Securities and Exchange Board of India Prohibition of Fraudulent and Unfair Trade Practices relating to Securities market) Regulations, 2003. In the matter of Pipavav Defence and Offshore Eng. Limited, Parsvnath Developers Limited, Tulip Telecom Limited and Glodyne Technoserve Limited In respect of M/s Yashika Holdings Pvt. Ltd (PAN AAACY0171H) Appearances: For Noticee: 1. Mr. N.P. Lashkari, Advocate 2. Mr. Shubhadip Choudhuri, Authorised Representative

For SEBI: 1. Mr. Santosh Kumar Shukla, Joint Legal Adviser 2. Mr. Manoj Kumar, General Manager 3. Ms. P. L. Leena Shree, Assistant Legal Adviser 4. Mr. Sachin Ashok Sonawane, Assistant Legal Adviser 5. Mr. Manish Kumar Gupta, Assistant Manager

1. Securities and Exchange Board of India ('SEBI'), being alerted by its surveillance systems, on July 26, 2012, noticed a downward movement in the prices of four scrips namely Pipavav Defence and Offshore Eng. Limited ('Pipavav'), Parsvnath Developers Limited('Parsvnath'),Tulip Telecom Limited ('Tulip') and Glodyne Technoserve Limited ('Glodyne') as compared to their closing prices on July 25, 2012 at the National Stock Exchange of India ('NSE') and Bombay Stock Exchange Limited ('BSE'). It was also observed that the prices of the said four scrips had seen a sharp downward movement within the time from 09:15 to 09:49 on July 26, 2012. During 15 days prior to July 26, 2012, no corporate announcements/price sensitive information was disclosed to the stock exchanges by the aforesaid companies which could have impacted prices of their shares negatively.

2. In the above background, SEBI, vide an ad interim ex-parte order dated August 03, 2012 (interim order), amongst others restrained M/s Yashika Holdings Pvt. Ltd. ('noticee')

from accessing the securities market and further prohibited it from buying, selling or dealing in securities in any manner whatsoever, till further directions.

3. Pursuant to the aforesaid interim order, the noticee made submissions/ objections vide letters dated August 17, 2012 and August 24, 2012. Opportunity of personal hearing was granted to the noticee on December 04, 2012 when Mr. N.P. Lashkari, Advocate, and Mr. Shubhadip Choudhuri, Authorised Representatives appeared and made submissions on behalf of the noticee. The submissions made by the noticee are as under: (a) It has denied all the charges and allegation in the interim order. (b) It has traded in only scrip of Glodyne on NSE and sold only 10000 shares. (c) It has bought the shares on July 17, 2012 and put the stop loss orders on July 23, 2012, July 24, 2012, July 25, 2012 and July 26, 2012 which ultimately triggered on July 26, 2012. (d) It had no intention of depressing the price of the scrip but was only interested in minimising losses and therefore it had placed the orders with stop loss. (e) It had suffered a loss of around 52% over the years because it could not sell the shares in time as it did not put the stop loss orders on the same. It was for this reason that though it entered into transaction after a longer gap, it did the same with a proper stop loss. (f) Upon analysis of historical data of price and volume and the annual results of the company ended on March 31, 2012 declared by the company on May 25, 2012 and the fact that a dividend was to be declared by the company for Rs. 4.60 per share in the AGM of the company scheduled to be held on July 24, 2012, it was convinced that in recent times the company was a very good company to invest into. (g) It was not connected to any of the 18 other entities against whom action has been taken in the order. (h) There is no evidence of any counterparty concentration in the trading carried out by it 4. I have considered the written and oral submissions of the noticee and the relevant material available on record. The limited issue to be considered in this order is to decide whether, based on the available material on record and after considering the submissions made by the noticee, the directions issued by vide ad interim ex-parte order need to be continued, revoked or modified in any manner, in so far as it relates to the noticee.

5. I note that as per the interim order the allegation against the noticee is that it had sold 10,000 shares of Glodyne at NSE on July 26, 2012 during the price fall period i.e. 9:17:03 to 9:24:09. The noticee has not disputed the said sale of shares during the price fall period and has contended that it had no intention of depressing the price of the scrip but had placed the orders to minimise its losses.

6. I note that the noticee had placed the stop loss orders on July 23, 2012, July 24, 2012 and July 25, 2012 at the trigger price of ` 330 per equity share of Glodyne and limit price of ` 320 per equity share. On July 26, 2012, the noticee reduced the stop loss price by ` 2 and put the stop loss order for 10,000 shares of Glodyne at a trigger price ` 328 per equity share and limit price of ` 320 equity share. On July 26, 2012, at 09:17:03 a.m. noticee placed a sell order of 500 Shares in a disclosed quantity of 50 shares at ` 337 per equity share. Out of this order of 500 shares, 343 Shares were sold and rest of 157 shares were modified to the rate of ` 338 per equity share. Further, the noticee modified pending stop loss order at 9:18:04 a.m. for the trigger price of ` 330 and limit price of ` 328. At 9:21:50 a.m. the stop loss got triggered and an order of 10,000 shares hit the normal market segment of NSE at a price of ` 328 per equity share in fully disclosed quantity and 315 shares got sold till the price of the scrip touched ` 328 per equity share against its order for 10000 shares. The noticee modified the stop loss order at 9:21:58 and as a result of this modification 2851 shares were sold between the price of ` 327.25 per equity share to ` 325 per equity share. The noticee modified the price of 3834 shares from ` 325 per equity share to ` 300 per equity share. Out of the said shares, 1720 shares were sold at ` 300 per equity share. The order was modified to a price of ` 275 per equity share only one rupee lower to then prevailing market price and the balance shares were sold by the notice between ` 276 per equity share and ` 275 per equity share. Further, the noticee by mistake sold 10343 shares and purchased back 343 shares from the market at the rate of ` 274.20 per equity share.

7. A stop loss order allows the client to place an order which gets activated only when the market price of the relevant security reaches or crosses a threshold price specified by the investor in the form of “Stop Loss Trigger Price”. When a stop loss trigger price is specified in a limit order, the order becomes one which is conditional on the market price of the stock crossing the specified stop loss trigger price. The order remains passive (i.e. not eligible for execution) till the condition is satisfied. Once the last traded price of the stock reaches or surpasses, stop loss traded price, the order becomes activated (i.e. eligible for execution by being taken up in the matching process of the exchange) and then on behaves like a normal limit order. It is used as a tool to limit the maximum loss on a position. In the present case, prima facie, the noticee had been putting the stop loss orders since July 23, 2012, July 24, 2012, July 25, 2012 which ultimately triggered on July 26, 2012. From the details submitted by the noticee, it is prima facie noted that noticee has suffered a loss of around 52% in the worth of its shares over a year period because it could not sell the shares in time as it did not put the stop loss order.

8. I note that the interim order has not alleged any connection of the noticee with other entities mentioned therein. At this stage, no material is available on record to establish noticee's relation/connection with other entities mentioned in the interim order who contributed to the major price fall on July 26, 2012. I also note that the noticee has dealt in only one scrip i.e. Glodyne and that too only on NSE. Further, there is no evidence of any counterparty concentration in the trades carried out by the noticee. In view of the same, I find that the noticee has made out a prima facie case at this stage that it sold the shares in question to minimise its losses and placed the stop loss orders.

9. It is observed that the directions issued vide ad interim ex-parte order against noticee were interim in nature and were issued on the basis of prima facie findings. I note that the investigation in the matter is going on. It is noted that the noticee has already undergone restraint for more than four months pursuant to the interim order. A final view with regard to the role of the noticee, if any in the matter, can be taken on the completion of the investigation. In my view, in the facts and circumstances of the case, the balance of convenience is in favour of the noticee. The facts and circumstances of the case relating to the noticee do not suggest any emergent or urgent reasons to continue with the directions issued against the noticee vide the ad interim order at this stage. I am, therefore, of the considered view that the directions issued against the noticee vide the ad interim order need not continue during the continuance of the pending investigation in the matter.

10. In view of the foregoing, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11(1), 11(4) and 11B thereof, hereby revoke the directions issued against M/s Yashika holdings Pvt. Ltd (PAN AAACY0171H) vide ad-interim ex-parte order dated August 03, 2012. It is, however, made clear that this order is without prejudice to any enforcement action that SEBI may deem necessary against the aforesaid noticee in the matter, on completion of the investigation. 11. A copy of this Order shall be served on all the recognized stock exchanges and depositories for necessary action. 12. This Order shall come into force with immediate effect.

RAJEEV KUMAR AGARWAL DATE: December 31st, 2012 WHOLE TIME MEMBER PLACE: MUMBAI SECURITIES AND EXCHANGE BOARD OF INDIA