Ahmedabad: The Securities and Exchange Board of India (Sebi) on October 27 imposed penalties on 22 entities including Gujarat Chief Minister Vijay Ramniklal Rupani’s Hindu Undivided Family (HUF). According to the Sebi order, the regulator has imposed penalties of Rs 6.9 crore on all the entities including Rupani’s HUF for manipulative trading through a listed firm Sarang Chemicals.
The Sebi order pertains to price manipulation, misleading appearance and creating fake volumes in the shares of Sarang Chemicals. The artificial volume in the company was created by trading among themselves, the Sebi order said. It added that Rupani’s HUF and 17 others “had indulged into artificial volume rise/creating misleading appearance of market/getting unlawful or unfair gain.” The regulator has imposed a penalty of Rs 15 lakh on Rupani’s HUF.
According to the Sebi order, between January 2010 and June 2011 , these 21 “related” entities purchased shares of Sarang Chemicals, which accounted for 33 per cent of the market value. These shares when sold later accounted for 86 per cent of the market value.
“During investigations, 21 entities/Noticee(s) “Group” were identified as connected/related through common address, telephone number, off-market transfers of shares and family members etc. Investigation Report (IR) revealed that the Group/Noticee(s) had bought 2,76,97,860 shares i.e. 32.97% of the market volume (8,40,17,121 shares) and sold 7,24,08,293 shares i.e. 86.18% of market volume during the investigation period,” Sebi said in its order.
Sebi order said at least 20 entities, including Rupani’s HUF, traded “voluminously among themselves” and generated interest among the other investors to trade in the scrip and when the other investors started trading in the scrip due to “such false impression of market, some of the group entities had offloaded shares in the market at an increased price”.
“Such pattern of trading clearly reveals the ulterior/malafide intent and certainly such activities of noticee numbers 1-18 & 20 is in violation of regulation 3 (a) to (d), 4 (1) & 4 (2) (a), (b) & (e) of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations,” the Sebi order said. Rupani could not be reached immediately for comment.