Capital market regulator Securities and Exchange Board of India (Sebi) has charged 22 entities, including Gujarat Chief Minister Vijay Rupani’s Hindu Undivided Family (HUF), for “manipulative trades” in little-known company Sarang Chemicals.
The regulator has imposed separate penalties amounting to Rs 6.9 crore on the 22 entities, which Sebi investigation found were “connected or related”. Rupani’s HUF has been asked to pay Rs 15 lakh, while three other individuals would have to shell out Rs 70 lakh or more each. Sebi says the penalties are “commensurate with the violations”. Among the 22 entities, there are two brokers (notice number 21 and 22) through whom the trades were executed. They have been asked to pay a penalty of Rs 8 lakh each.
The alleged manipulative transactions were done between January 2011 and June 2011 — the investigation period. Rupani took charge as Gujarat CM in August 2016.
In May 2016, Sebi had issued a common show cause notice to the 22 entities alleging violations under Sebi Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) relating to the securities market.
Story so far
2011 - Jan 3-Jun 8: Sebi conducts probe in Sarang Chemicals’ shares
2015 - Jul 13: Market regulator initiates adjudication proceedings
2016 - May 6: It issued show cause notice to all 22 entities, including Gujarat CM Vijay Rupani’s HUF, which he does not respond to
2017 - Oct 27: Sebi passes penalty order of Rs 6.9 crore against the 22 entities, including Rs 15 lakh on Rupani HUF
The Rupani HUF was noticed number 18 in the matter. Telephone calls, emails and messages to Rupani and his office went unanswered. Business Standard verified Rupani’s HUF permanent account number that Sebi mentioned in his affidavit on the Election Commission of India website. “Since the violations of the notices (the 22 entities) have been established and the same are serious in nature, therefore, I am of the view that the monetary penalty under section 15 HA of the Sebi Act (PFUTP) against the notice numbers 1-20 and monetary penalty under section 15 HB of the Sebi Act (Stock Brokers Regulations) against noticed numbers 21 & 22 are warranted in the case,” said Sebi in a 31-page order dated October 27. Sebi has bifurcated the notice into two considerations — one for price manipulation and the other for creating the misleading appearance in the securities market and creating artificial volume in the shares of Sarang Chemicals by trading among themselves. Vijay Rupani HUF (notice 18) is mentioned in the second consideration.
During the investigation period, 20 entities bought shares that accounted for 33 percent of the market volume and later sold shares that accounted for 86 percent of the market volume. Sebi said Rupani HUF had gross sales of 87,311 shares accounting for 0.1 percent of the gross sales to total selling volumes. However, the HUF is not one of the entities which benefited.
“It is observed that notice numbers 1-9, 18 & 20 by trading voluminously amongst themselves had first generated interest among the other investors to trade in the scrip and when the other investors started trading in the scrip due to such false impression of market, some of the group entities (noticed numbers 1-5 and 10-17) had offloaded shares in the market at an increased price... Such pattern of trading clearly reveals the ulterior/malafide intent and certainly such activities of noticed numbers 1-18 & 20 is in violation of regulation 3 (a) to (d), 4 (1) & 4 (2) (a), (b) & (e) of the PFUTP Regulations,” the Sebi order says.
The market regulator also said that Rupani didn’t reply to the show cause notice (SCN) issued by it. “The notices (Rupani HUF) contended that the CD (compact disk) attached to SCN is damaged and it is unable to open the same. Considering the request for the notice, another CD was sent to him vide communique, dated May 25, 2016, and informed the notice number 18 that in case it is still unable to open the CD then, its duly authorized person may collect the same from the office of undersigned with prior intimation. It was also stated in said communique to provide its e-mail ID. Vide letter dated June 13, 2016, the notice requested for keeping in abeyance the proceedings till Mr. Vijay Rupani recovers. As per medical certificates attached with said letter suggested for rest of eight weeks to Vijay Rupani from May 18, 2016, however, no reply towards the SCN has been received from it/him till date,” Sebi said in the order.
Sebi said it passed an ex-parte order as the notice, including Rupani HUF, failed to submit their reply to the SCN within the sufficient time provided.
The Sebi adjudicating officer disapproved of the modus operandi and said, “I am of the view that the modus operandi used by the said notice(s) in first creating an artificial interest of trading in the scrip/manipulatively luring investors to trade and then, offloading shares at increased price and thereby making an unlawful gain is serious in nature and detrimental to the market.”
Looking for investment in Share Market, CapitalStars Financial Research Private Limited provides you best investments Tips in Share Market.It daily provides intraday and Future calls.We generate intraday as well as delivery calls in Stock cash and F&O in NSE & BSE, Commodities.
Also u can visit :-
capitalstars past performanceGet more details here:-
Stock Tips
Share Market Company
Stock Advisory Company
* Investment & Trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
* CapitalStars Investment Adviser: SEBI Registration Number: INA000001647
0 comments:
Post a Comment