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Sebi Prohibits 85 Companies From Capital Markets For Fraudulent Trading

Further, 77 out of the 83 connected entities were counterparties to the sale of shares by 1,059 entities/allottees at the artificially inflated or manipulated price, thereby violating rules.

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The Securities and Exchange Board of India (Sebi) on Monday, has banned a total of 85 companies like Sunrise Asian Ltd, from the capital markets for one year for influencing the company's share price.

In an official notice, the regulatory body has prohibited Sunrise Asian and its then five directors from the capital markets for one year and the 79 connected entities for six months.

Sebi had conducted a probe in the script of Sunrise Asian for the period from October 16, 2012, to September 30, 2015, based on a reference received from the Principal Director of Income Tax (Investigation), Kolkata.

The investigation was conducted to ascertain whether there was any violation of the provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations by certain entities while trading. 

In its probe, Sebi found that pursuant to allotment of shares under the scheme of amalgamation, Sunrise Asian and it's then directors had devised an arrangement whereby 83 connected entities had manipulated the price of the scrip in four patches of trading during the investigation period, thereby violating PFUTP norms.

Further, 77 out of the 83 connected entities were counterparties to the sale of shares by 1,059 entities/allottees at the artificially inflated or manipulated price, thereby violating rules. 

Of the 83 entities, instant proceeding initiated against four entities has been disposed of. Of the four entities, two have passed away and one has settled the case with Sebi under the settlement mechanism.

In a separate order on Friday, the regulator prohibited Coral Hub Ltd from the capital markets for three years and six individuals for periods varying from 2-3 years for violating regulatory norms.

These individuals were either directors of the company or part of the audit committee of Coral Hub Ltd at the time of the violation.

The entities published false, inflated, and misleading financial results of the company during 2008-09 and 2009-10, failed to disclose the sales made to related party under the head-related party transaction in the annual report for 2009-10, Sebi noted.

Through such acts, they violated the provision of PFUTP norms. The order comes after Sebi received a complaint alleging that the revenues and profit of Coral Hub were fabricated and artificial. 

Thereafter, the regulator conducted an investigation into the matter for the period from April 2008 to June 2010 to ascertain the violations, if any, of the provisions of Sebi Act and PFUTP norms.

(With PTI inputs)


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