Sebi bans 85 entities from capital mkts for fraudulent trading

Sebi on Monday barred total 85 entities, including Sunrise Asian Ltd, from the capital markets for up to one year for manipulating the company's share price.

In its order, the regulator restrained Sunrise Asian and its then five directors from the capital markets for one year and the 79 connected entities for six months. The Securities and Exchange Board of India (Sebi) had conducted an investigation in the scrip of Sunrise Asian for the period from October 16, 2012 to September 30, 2015, based on a reference received from the Principal Director of Income Tax (Investigation), Kolkata.

The investigation was conducted to ascertain whether there was any violation of the provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices ) Regulations by certain entities while trading. In its probe, Sebi found that pursuant to allotment of shares under the scheme of amalgamation, Sunrise Asian and its then directors had devised an arrangement whereby 83 connected entities had manipulated the price of the scrip in four patches of trading during the investigation period, thereby violating PFUTP norms.

Further, 77 out of the 83 connected entities were counterparties to the sale of shares by 1,059 entities/allottees at the artificially inflated or manipulated price, thereby violating rules. Of the 83 entities, instant proceeding initiated against four entities has been disposed of. Of the four entities, two have passed away and one has settled the case with Sebi under settlement mechanism.

In a separate order on Friday, the regulator prohibited Coral Hub Ltd from the capital markets for three years and six individuals for periods varying from 2-3 years for violating regulatory norms. These individuals were either director of the company or part of the audit committee of Coral Hub Ltd at the time of the violation. The entities published false, inflated and misleading financial results of the company during 2008-09 and 2009-10, failed to disclose the sales made to related party under the head-related party transaction in the annual report for 2009-10, Sebi noted.

Through such acts, they violated the provision of PFUTP norms. The order comes after Sebi received a complaint alleging that the revenues and profit of Coral Hub were fabricated and artificial. Thereafter, the regulator conducted an investigation into the matter for the period from April 2008 to June 2010 to ascertain the violations, if any, of the provisions of Sebi Act and PFUTP norms.