Tax evasion through stocks: Sebi revokes ban on 307 entities

Regulator Sebi has revoked ban on 307 entities, which had come under scanner between 2014-2016 for alleged manipulation and misuse of stock market platform for tax evasion.
However, Sebi would continue its proceedings against 96 remaining debarred entities as multiple violations have been found in their case.
In two separate orders, the regulator said its detailed investigations did not show any violation of the Sebi rules against fraudulent and unfair trade practices by 91 entities in the First Financial case, while probe into another matter showed that no violation could be established against further 216 entities.
These were among the entities that were barred through separate interim orders by Sebi for alleged violation of rules purportedly for misuse of stock exchange platforms for tax evasion and other illicit gains.

In the first case, Sebi passed an interim order on December 19, 2014 barring 152 entities, followed by another one on August 11, 2015 restraining two entities from the securities markets pending investigation. These actions were taken for alleged manipulation in shares of First Financial Services Ltd.
Out of these, orders were confirmed later against 149 entities, while the ban was revoked for five others later.

Sebi said it conducted further probe subsequently into the role of the debarred entities and has now found that no violation could be established by 91 entities, which include individuals and companies.
"Since, the prima facie findings are not observed in the investigation reports in respect to aforementioned 91 entities, the directions issued earlier vide interim orders need not be continued and hence need to be revoked," Sebi said.

However, proceedings would continue against 58 remaining debarred entities as the regulator has observed violations of several norms in their case. These violations relate to the Sebi Act, the Securities Contracts (Regulation) Act, the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations, the Substantial Acquisition of Shares and Takeovers Regulations and Listing Agreement.
In the second case, Sebi had passed an interim order in June 2015 to bar 238 entities, followed by another order in January 2016 against 16 others, in the matter of dealing in shares of Eco Friendly Food Processing Park, Esteem Bio Organic Food Processing, Channel Nine Entertainment and HPC Biosciences.

These directions were later confirmed through various orders between June 2015 and June 2017, except for certain specific reliefs provided to certain entities.
Subsequent to these orders, Sebi conducted a detailed investigation into the role of the debarred entities for price and IPO manipulations.
Upon completion of the investigation, Sebi said no violation was observed of Sebi's PFUTP Regulations in case of 216 entities against whom debarment directions were issued through interim orders.
"Since, the prima facie findings are not observed in the investigation reports in respect to aforementioned 216 entities, the directions issued earlier vide interim orders need not be continued and hence need to be revoked," Sebi said.

The regulator said proceedings would continue against the remaining 38 debarred entities in this case as violations have been observed for the Sebi Act, PFUTP Regulations, Issue of Capital and Disclosure Requirements Regulations and the Securities Contracts Regulation Act.