Market regulator Sebi has slapped a fine of Rs 2.75 crore on six entities for alleged involvement in fraudulent trading in the shares of Gangotri Textiles.
Sebi, in separate orders, has imposed a penalty of Rs 1 crore on Purshottam Khandelwal, Rs 75 lakh on Quantum Global Securities and Leasing Company, Rs 60 lakh on Sunita Gupta, Rs 25 lakh on Master Finlease, Rs 10 lakh on Vishvas Projects and Rs 5 lakh on Avisha Credit Capital.
It was alleged that these six entities, among others, collectively referred as 'Vishvas Group' had executed synchronised, circular and reversal trades among themselves and traded in significant variation to the Last Traded Price (LTP) in the shares of Gangotri during April-May 2006.
In a probe conducted by Sebi, it was found that trades of the members of Vishvas Group were with the intention not to transfer the beneficial ownerships of the shares of Gangotri but with an intention to operate only as a device to inflate, depress or cause fluctuations in the price of shares of Gangotri for wrongful gains.
"Thus, noticee (Khandelwal, Gupta, Quantum Global Securities and Master Finlease through collusion with the other members of the Vishvas Group has transacted in the shares of Gangotri in such a manner that led to creation of artificial volumes in the scrip and a false market leading to price movement in the scrip which lacked presence of any sort of fundamentals."
Also, the Securities and Exchange Board of India (Sebi) noted that Vishvas Project and Avisha Credit Capital have aided and abetted the members of Vishvas Group in executing circular trades and manipulating the price of the scrip of Gangotri.
Consequently, Sebi has imposed penalty on these six entities under PFUTP (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, Besides, Quantum Global Securities have violated stock broker norm.
