SEBI imposes penalties on Vijay Rupani's HUF, 21 others for 'manipulative trading'


Money Control 
November 09, 2017

Market regulator SEBI has imposed penalties on 22 entities including Gujarat Chief Minister Vijay Rupani's Hindu Undivided Family (HUF),  for 'manipulative trading'. The regulator has imposed total penalties worth Rs 6.9 crore on all entities.

Rupani's HUF has been accused of manipulative trading through a company called Sarang Chemicals.
The Securities and Exchange Board of India has directed Rupani's HUF to pay Rs 15 lakh, while three other individuals have been asked to deposit Rs 70 lakh each or more.

The list of 22 entities includes two brokers, who were involved in the trading. SEBI has levied penalty of Rs 8 lakh on both, separately. According to the report, the manipulative trading happened during the January 2010-June 2011 period. The regulator had issued show cause notice to all the 22 listed for violations under the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) — which is related to fraud in the securities market.

In an order dated October 27, SEBI said that the violations by the companies and the two brokers have been established and has hence, imposed monetary penalty on each. The notice has been for two categories - one for price manipulation and the other for 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 notice said.

Rupani's HUF has been classified under the second category.

The report further says that during the investigation period - January 2010 to June 2011 - 20 entities purchased shares, which accounted for 33 percent of the market value. These shares when sold later accounted for 86 percent of the market value.

“It is observed that noticee numbers 1-9, 18 & 20 by trading voluminously amongst themselves had first 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 (noticee numbers 1-5 and 10-17) 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 Regulations,” the Sebi order says.

Rupani didn't reply to SEBI's show cause notice, the report said.


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