Markets regulator Sebi will consider penal action against Punjab National Bank and Gitanjali Gems after completion of its probe into suspected trading and disclosure related issues in the matter of over Rs 14,000 crore banking fraud.

The markets watchdog last week issued a warning letter to PNB for delaying disclosures to stock exchanges about the fraudulent transactions allegedly carried out by absconding Nirav Modi and Gitanjali Group. However, the probe is continuing and the penal action would depend on the final outcome of the investigation, the officials added.

PNB was defrauded allegedly by the diamond trader and his associates by fraudulent use of LoUs and Foreign LoCs in connivance with certain bank officials. The Sebi and stock exchanges have been analysing the stock market trade details of all entities associated with Modi and Gitanjali Gems’ main promoter Mehul Choksi, who has already been under the scanner for various cases, including a brokerage default incident, officials said.

Incidentally, in July 2013, NSE in consultation with Sebi had debarred Gitanjali Gems and Choksi, among others from trading, for securities market violations relating to trading in his company.

Further, they are also being investigated by the Enforcement Directorate and Central Bureau of Investigation.

As per Sebi’s warning letter, there were delays of 1-6 days by PNB in making disclosures to the stock exchanges pertaining to the filing of complaints with RBI and CBI. This delay in informing the stock exchanges is a violation of the listing regulations. Under these norms, companies need to inform stock exchanges about any price sensitive information in a timely manner. The Sebi’s communication refers to various disclosures made by PNB to stock exchanges during February and March this year regarding certain fraudulent transactions with respect to Modi group, Gitanjali group and others, and referring the same to law enforcement agencies.