Markets regulator Sebi on Wednesday barred a director of Incap Financial Services from capital markets for four years for indulging in fraudulent trading.
Besides, the regulator ordered to impound the losses avoided, worth over Rs 7 crore, by the director Arvind Goyal through fraudulent trading.
In addition, the regulator prohibited Abhay Javlekar and Goyal's wife Pooja from accessing capital markets for three years.
Sebi said that Goyal was the company's executive director and compliance officer as on February 23, 2011, and continues to remain a director as on date, as per the data available on the Ministry of Corporate Affairs website.
The Securities and Exchange Board of India (Sebi) undertook a preliminary examination after it received a complaint alleging circulation of an SMS stating declaration of the dividend within a week by Incap Financial Services (ISFL).
The message was circulated by one Prem Agarwal on January 11, 2011.
In the probe, it was found that Goyal accumulated the shares of Incap during the investigation period, before the circulation of SMS and subsequently sold shares in the market after the circulation of the false and misleading SMS.
However, as the price of the scrip of Incap did not increase, he offloaded such shares in the securities market to avoid further loss.
Further, Goyal had entered into manipulative and unfair trade practices such as self–trades, synchronised and reversal trades for artificial volume creation in the scrip of Incap on account of trading in his account and the accounts of Javlekar and Pooja, Sebi noted.
By indulging in such trades, Goyal avoided losses to the tune of Rs 7.08 crore and consequently, the regulator directed him to disgorge the amount along with annual interest of 12 per cent.
Further, Sebi said that as the acquisitions made by Arvind Goyal along with 'persons acting in concert' -- Javlekar and Pooja -- with him was over the threshold limits under the Takeover regulations, they were required to make an open offer. However, they failed to do so.
Accordingly, the regulator said Goyal "shall not access the securities market or buy, sell or otherwise deal in the securities market, either directly or indirectly for a period of 4 years" and Javlekar and Pooja have been restrained from the capital markets for three years.