Sebi has summoned six entities to appear before it regarding proceedings initiated against them for indulging in capital markets irregularities, after the show cause notices issued to them returned undelivered.
In six separate hearing notices, the entities -- Shaishil T Jhaveri, Kumkum Stock Broker, Nita B Bhavsar, Jagdish Bhagat, Parameshwar Exports and Chase marketing -- have been directed to appear before Sebi on April 28.
The Securities and Exchange Board of India (Sebi) had issued the show cause notices to the six entities, last year, but the same were returned to the market regulator 'undelivered'. The regulator has now issued the hearing notices.
According to the notices, Jhaveri, Kumkum and Bhavsar, are being probed for their involvement in circular trading in five scrips, while Bhagat has to appear in the case related to Riba Textiles and Supertex Industries.
Other two entities -- Parameshwar Exports and Chase Marketing -- have been sought for adjudication proceedings against them in the matter of Supertex Industries.
All the entities have been asked to submit their reply to the show cause notices by April 21 and then attend for the hearing before the market regulator on April 28.
The watchdog has said that if the entities fail to attend the hearing "the matter will be proceeded on the basis of material available on record".
Sebi has been looking into circular trading in shares of five companies -- Riba Textiles, Supertex Industries, Bridge Securities, Aarey Drugs & Pharmaceuticals and Winsome Textile Industries.
The watchdog had conducted a probe in 2009 and had observed that a group of connected entities were involved in trading amongst themselves in these five scrips.
The Investigation Report (IR) had said that a group of 25 entities including Jhaveri, Bhavsari, Kumkum were connected to each other by common address, common introducer or introduced by other group members.
It is alleged in the show cause notices that the entities in collusion with the group had executed circular trades, synchronised trades, reversal trades and self trades in the five scrips which had resulted in creation of artificial volume leading to false and misleading appearance of trading in the shares.
Further, this has also artificially increased the price in the five scrips and hence is fraudulent in nature.
