Sebi moves against money laundering in listed SMEs

The Securities and Exchange Board of India (Sebi) has moved against four companies listed on a special platform created for fund-raising by small and medium enterprises (SMEs).

Sebi's investigations have revealed certain entities manipulated the share price of these companies to launder money. The regulator has barred a total of 239 persons / entities, including the four companies, from accessing the market.

The four companies are Eco Friendly Food Processing Park Limited, Esteem Bio Organic Food Processing Limited, HPC Biosciences Limited, and Channel Nine Entertainment Limited. The first three are involved in agricultural businesses, while the fourth is a production and distribution company for serials, films and events. The companies were listed on the BSE between January and March 2013.

"I am of the considered view that the schemes, plan, device and artifice employed in this case, apart from being a possible case of money-laundering or tax evasion, which could be seen by the concerned law enforcement agencies separately, is prima facie also a fraud in the securities market," said the Sebi order.

Entities bid up the shares of the companies to convert black money into white, according to the Sebi order. The total profit earned by the entities involved is pegged at Rs 468.99 crore. The ban comes into force with immediate effect. The barred entities can file objections within 21 days.