Sebi probe finds front-trading by barred entities
Mumbai: In a clampdown on indirect dealings by entities debarred from the market, Sebi today prohibited eight individuals and three entities from dealing in securities and warned four individuals of "Pabari-Parikh Group" for trading through front entities in defiance of restrainment orders against them.
The four individuals -- Bhavesh Pabari, Hemant Sheth, Prem Mohanlal Parikh and Ankit R Sanchaniya -- were barred from the securities market by Sebi in February, 2011.
However, Sebi found that these individuals had provided funds to certain entities which then had fraudulently dealt in shares of three companies -- Polytex India Ltd (PIL), KGN Enterprises (KGN) and Gemstone Investments Ltd (GEMSTONE).
"...The continued indirect dealing by the debarred persons and thereby circumventing the restraining order of Sebi, forces the heavy hand of the law to act against such brazen defiance," Sebi said in an order today.
"Sebi may initiate adjudication proceedings and /or prosecution proceedings against Bhavesh Pabari, Hemant Sheth, Prem Mohanlal Parikh and Ankit R Sanchaniya for non compliance of Sebi order...Dated February 2, 2011," it added.
The matter relates to Sebi examination in the scrips of the three companies in view the surveillance alerts regarding variation in their prices.
The regulator said it observed that eight individuals had received funds from the barred Pabari-Parikh Group entities.
It was found that these individuals created artificial volumes in the scrips of the three firms, substantially traded amongst themselves and placed orders at a price higher than the last traded price and thereby contributed to the rise in price in PIL and GEMSTONE.
In light of the alleged fraudulent dealings, Sebi today restrained these eight individuals and another three entities from the capital market, till further directions.
Sebi said that the phenomenal regularity, frequency and manner in which these entities had indulged in transactions in the scrips indicate that their transactions were for the purpose of creation of artificial volume with a sinister motive to induce gullible investors to trade in the scrip.