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Market regulator SEBI has slapped a total fine of over ₹14.4 crore on five entities, an amount twice the ill-gotten gains made by them while fraudulently trading in the scrip of Sunteck Realty Ltd.
Of these, the two entities– Jitendra Joshi and Shripal Shares and Securities Ltd– that have incurred losses are facing a fine of ₹5 lakh each.
The entities have been penalised for executing circular trades among themselves, thereby violating Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms.
By trading in the scrip of the firm, the entities made a combined profit of over ₹7.24 crore.
The matter pertains to a probe conducted by SEBI between April 2007 and August 2008 on receipt of an alert in its surveillance system with regard to the price movement and trading pattern in the scrip of Sunteck Realty.
SEBI noted that scrip price of the realty firm rose from ₹494.05 on April 02, 2007 to ₹579.4 on April 30, 2007 and further increased to ₹1,630.9 on October 31, 2007. It touched a high of ₹1,957.1 on November 21, 2007 and closed at ₹1,725 on December 31, 2007. The scrip closed at ₹1,427.25 on August 31, 2008.
List of entities
It found that the entities– Chiranjilal Jayaram Vyas, Namdeo H. More, Kishore Bhikaji Giri, Deendayal M. Bohara, Kishorilal Amrutlal Bissa, Jitendra Harivansh Joshi and Shripal Shares and Securities Ltd– executed circular trades among themselves.
They transferred shares through off-market route to a large number of other entities, who then sold the shares in the market so as to give an impression of widespread trading in the scrip of Sunteck. This contributed significantly to the market volume as well as price rise in the scrip, SEBI said.
“In the present case, the Noticees, which are found to be connected to each other, contributed significantly to the market volume in the scrip of Sunteck during the period of investigation, which was as high as around 75-80 per cent in four months,” it added.
SEBI noted that Chiranjilal Vyas made a profit of nearly ₹3.53 crore, Namdeo More gained over ₹2.69 crore, Kishore Giri gained ₹62 lakh, Deendayal Bohara made a profit of ₹35.4 lakh and Kishorilal Bissa gained ₹4.47 lakh.
While imposing the fine for violating PFUTP norms, SEBI said a penalty amount twice the ill-gotten gains may be appropriate and levied a total fine of ₹14,48,18,966.
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