Sebi imposes Rs 1.62-crore fine on 9 entities for fraudulent trading

Capital markets regulator Sebi on Tuesday imposed a fine of Rs 1.62 crore on nine entities for manipulating shares of Sterling Green Woods Ltd.

In its order, the regulator levied a fine of Rs 18 lakh each on entities -- Radhe Krishna Broking, Harshad Panchal, Hemang Shah, Umesh Patel, Abhishek Soni, Sonal Patel, Dhaval Soni, Anurag Agarwal and Paksh Developers Pvt Ltd.

The Securities and Exchange Board of India (Sebi) had conducted an investigation into alleged irregularity in the trading in the scrip of Sterling Green Woods Ltd (SGWL) for the period April-July 2009.

In its order, Sebi noted that SAT vide an order date March 2, 2022, have allowed the appeals filed by the entities against the sebi order.

The tribunal had remanded the case back to Sebi for fresh order on merits after giving an opportunity of personal hearing to the appellants.

Passing a 107-page order, the regulator found that there were nine entities along with few others, collectively called Hemang Shah Group, were connected to each other and also traded in the scrip of SGWL, Sebi said in an order.

Further, Paksh Developers and its director Anurag Agarwal had provided the money (through bank account of Paksh) as well as the shares of the company (through selling the shares by Paksh) to the Hemang Shah Group entities.

Thereafter, they rigged the price up by placing both buy and sell orders at higher price and accumulated the shares while creating artificial volume in the scrip, the regulator noted.

Further, the regulator observed that when the price of the scrip reached its highest level in July 2009, the entities sold off their shareholding in the same month.

The price was increased by the trades of Hemang Shah Group entities, Sebi said.

The nine entities made a profit of Rs 54 lakh by creating artificial volumes, rigging prices and selling shares in July 2009.

By doing so, the entities have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices).

Meanwhile, In another order, the market regulator levied a fine of Rs 37 lakh on four individuals for indulging in misutilisation of the IPO proceeds and other disclosure lapses in the matter of Resurgere Mines and Minerals India Ltd (RMMIL).

The order came after Sebi had conducted an investigation into the IPO of RMMIL for the period September 1-8, 2009.

RMMIL had come out with its IPO during August 11-13, 2008 and had issued an ICD from PR Vyappar in the same.

It was found that RMMIL had siphoned off and not utilised the IPO proceeds for the purpose for which it was raised.

Further, they made wrong and misleading disclosures and non-disclosure with respect to ICDs (Inter-Corporate Deposit) in the offer document and has defrauded the investors at large.

Apart from the company, the directors and its compliance officer also recklessly omitted to perform their part, which resulted in the diversion of IPO proceeds, and has not exercised any due diligence to prevent the offence.

By doing so, they violated the PFUTP norms.

In another order, the regulator slapped a fine of Rs 20 lakh on Pantomath Stock Brokers Pvt Ltd (now known as Pentagon Stock Brokers Pvt Ltd) for indulging in misutilisation of clients' securities.

In a separate order, the regulator imposed a fine of Rs 10 lakh on two individuals for lapses in non-disclosure in the matter of Netlink Solutions (India) Ltd.

In another order, Sebi levied a fine of Rs 10 lakh on Tamarind Capital Pte Ltd for crossing the threshold limit of voting rights and not making a public announcement of open offer in the matter of Indiabulls Ventures Ltd (now known as Dhani Services Ltd).