Sebi today barred First Financial Services and 28 others from the markets for three years for orchestrating a fraudulent scheme involving preferential allotment route, which ultimately benefited a few allottees.
The move follows Securities Appellate Tribunal's (SAT) directive to Sebi for passing the final orders in the matter by March this year.
The markets regulator had conducted an investigation into the dealings of the First Financial Services Ltd (FFSL) stock as it observed abnormal movement in the price and trading volume of the scrip on BSE from May 15, 2012 to March 31, 2014.
Besides, Sebi had received references from the Director General of Income Tax (Investigation).
The probe found that FFSL and its connected entities perpetrated a fraudulent scheme which included the two tranches of preferential allotment, manipulative trades jacking up the price of the scrip, unexplained fund transfers between several connected entities and FFSL and profits made by those entities that exited subsequently.
"It can be seen that FFSL, its directors along with the Comfort group and certain other noticees basically orchestrated a fraudulent scheme involving preferential allotment route, which ultimately benefited a few allottees and was never retained for utilisation as per the stated objects of the issue," the regulator noted.
By indulging in such activities, they violated the provision of PFTUP (Prohibition of Fraudulent and Unfair Trade Practices) norms.
Accordingly, the Securities and Exchange Board of India has prohibited these 29 entities from accessing the securities for a period of three years.
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