Shri G. Anantharaman, Whole Time Member, SEBI vide order dated January 13, 2006 has restrained Jermyn Capital LLC, a foreign corporate sub-account of SEBI registered Foreign Institutional Investor Taib Bank E.C. from accessing the Indian securities market and from buying, selling and dealing in securities in the Indian market. This order shall come into force with immediate effect.
Jermyn Capital LLC having its office at Dubai, UAE was found not to satisfy the criteria set out under the Regulation 3 of SEBI (Criteria for Fit and Proper Person) Regulations, 2004 read with Regulation 13(bb) of SEBI (Foreign Institutional Investors) Regulations, 1995 in view of linkages between Jermyn Capital LLC, Jermyn Capital Partners Plc (UK) and Mr. Dharmesh Doshi/ Mr. Ketan Parekh. It was found that Jermyn LLC is an associate of Jermyn Capital Partners Plc.(UK). Jermyn Capital Partners Plc (UK) is a corporate entity based in United Kingdom registered with Financial Services Authority, UK (FSA). Jermyn Plc is also a member of the London Stock Exchange since the year 2002. Jermyn Capital Partners Plc (UK) was formerly known as Triumph Securities UK Plc which was a 100% subsidiary of Triumph International Finance (India) Ltd. (TIFIL) through its Mauritius based subsidiary International Holdings (Triumph) Ltd. SEBI had earlier conducted investigations in the wake of the ‘Stock Market Scam of 2001’ and initiated various punitive actions against TIFIL and its directors including Mr. Ketan V. Parekh, Mr. Kartik K. Parekh, Mr. Dharmesh Doshi, Mr. Jatin R. Sarvaiya and Mr. A.R Kapadia. While Mr. Ketan Parekh and three other Directors of TIFIL were arrested in May 2002, Mr. Dharmesh Doshi evaded arrest and is still absconding. A Red Corner Notice has been issued against him by the Interpol in year 2002. It has come to the notice of SEBI recently that Mr. Dharmesh Doshi is presently functioning as the Executive Director of Jermyn Capital Partners Plc, UK (formerly Triumph Securities UK Plc) and is in charge of very vital functions which tantamount to virtual control of operations of the above company.
As per SEBI’s order, it prima facie appears that there are linkages between Jermyn Capital LLC, Jermyn Capital Partners Plc and Dharmesh Doshi/Ketan Parekh in view of the following commonalities – (i) common name of Jermyn Capital, (ii) two common directors including Chairman. (iii) common shareholders accounting for 49% shares in Jermyn Capital LLC, (iv) the earlier name of Jermyn Capital Partners Plc being Triumph Securities UK Plc which was a 100% subsidiary of TIFIL, a Ketan Parekh related entity (v) Mr. Dharmesh Doshi, a co-accused in the Stock Market scam of 2001 and a person against whom non-bailable warrant has been issued by the Indian Court and Red Corner Notice has been issued by Interpol, being the Executive Director in Jermyn Capital Partners Plc looking after vital functions, (vi) Jermyn Capital LLC being an associate of Jermyn Capital Partners Plc indicating interlacing and interlocking of operations and control and (vii) trading/investment in the shares of HFCL which is a K-10 scrip.
SEBI also found that Jermyn Capital Partners Plc had obtained approval of the Financial Services Authority of UK for appointment of Mr. Dharmesh Doshi in key functions of the company by giving misleading information and not disclosing true and full facts regarding Mr. Dharmesh Doshi and TIFIL and actions initiated against them by various enforcement agencies in India. It was also found that the connection between Jermyn LLC and Jermyn Plc and the involvement of Mr. Dharmesh Doshi was not disclosed by Jermyn LLC to SEBI at the time of grant of sub-account registration to Jermyn LLC by SEBI. SEBI had issued a letter dated November 30, 2005 to Taib Bank seeking specific information on the above matter and directing it to stop trading on behalf of the above sub-account, Jermyn LLC.
In view of the above, Jermyn Capital LLC was found not to satisfy the criteria set out under the Regulation 3 of SEBI (Criteria for Fit and Proper Person) Regulations, 2004 read with Regulation 13(bb) of SEBI (Foreign Institutional Investors) Regulations, 1995.
In view of the emergent nature of the matter and to protect the interest of investors and securities market, SEBI has vide order dated January 13, 2006 issued under Section 19 of the Securities and Exchange Board of India Act 1992 read with Section 11B and 11(4)(b), pending investigation and/or enquiry, directed that the restriction imposed on Jermyn LLC by SEBI vide communication dated November 30, 2005 be continued and has further restrained Jermyn LLC from accessing the Indian securities market and from buying, selling and dealing in securities in the Indian market.
The above order has been passed by SEBI in a record time after issuing a detailed show cause notice and providing an opportunity of being heard to Jermyn LLC in compliance of the directions of Hon’ble Securities Appellate Tribunal.
The full text of the Order is available on the website: www.sebi.gov.in Mumbai