Latest News | Sebi Slaps Rs 1.3 Cr Fine on Basant Malpani for Manipulative Trading in Gujarat Arth Case

New Delhi, Mar 24 (PTI) Stock market regulator Sebi on Wednesday slapped a fine of Rs 1.3 crore on Basant Malpani for disclosure lapses and indulging in manipulative trading activities in the shares of Gujarat Arth Ltd (GAL).

This comes after the Securities Appellate Tribunal (SAT) had asked the regulator to pass a fresh order in matter. In July 2016, the tribunal had set aside an order passed by Sebi in February 2015, whereby it had imposed a penalty of Rs 1.3 crore on Basant Malpani (noticee).

The Securities and Exchange Board of India (Sebi) had conducted an investigation into the alleged irregularity in the trading in the shares of Gujarat Arth from October, 2003 to January 2004 period.

The probe revealed that the promoters and persons acting in concert (PACs) of GAL including the noticee were instrumental in issuing misleading corporate announcements on November 1, 2003, December 22, 2003, and January 16, 2004. Financial results regarding acquisition of business of Poonam Industries, preferential/ right issue, which did not materialise and which lured investors, leading to creation of artificial volumes, the probe found.

Further, the regulator found that Malpani received shares of GAL in the off-market and actively traded in the shares of GAL, contributing to over 11 per cent of the market volume of GAL on the buy side and 9.48 per cent of the volume on the sell side.

Also, he had failed to make the required disclosures under takeover and insider trading norms.

Despite issue of several summons, he not only failed to appear before the Investigating Authority but also did not provide the information sought from him, the regulator noted.

The violation is in gross violation of the Sebi Act and amounted to scuttling the investigation to the detriment of the investors, Sebi said.

"I am of the view that there is no case for change in the penalty imposed on the noticee vide order dated February 9, 2015 for violation of ...PFUTP Regulations and SAST Regulations," Sebi's Adjudicating Officer Asha Shetty said while passing a fresh order in this matter.

PFUTP norms refers to Prohibition of Fraudulent and Unfair Trade Practices in securities market, while SAST is Substantial Acquisition of Shares and Takeover Regulations.

In a separate order, Sebi levied a fine of Rs 12 lakh on 11 individuals and one entity over disclosure lapses while dealing with the shares of Dwitiya Trading Ltd.

It was found that the individuals and entity were the promoters of Dwitiya Trading during the investigation period and failed to make requisite disclosure regarding the decrease in their shareholding during March to June 2013 within the specified timeline, thereby violating insider trading regulations. HRS hrs

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)