Capital market regulator SEBI has imposed a fine of Rs 1 lakh on an individual for his alleged role in fraudulent trading practices in the shares of Empower Industries India Ltd (EIIL).
After considering facts and circumstances, SEBI has imposed “a penalty of Rs 1 lakh on Kalpesh Babaraya... for the violation of... the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations.”
The matter related to a probe conducted by SEBI in the shares of EIIL during February 16 — March 11, 2005.
The regulator found that the company’s share surged from Rs 81 to Rs 113 during 18 trading days and total trading volume stood at 2.17 lakh shares.
SEBI said Babaraya was party to circular movement of the company’s shares with a clear intention to inflate trade volumes, creating interest in the scrip and had aided and abetted the company, Promoter-Director Devang Master in manipulation thereby defrauding the innocent investors.
”...the company made false announcements that facilitated in creating a general interest in the scrip and helped the Master and the noticee (Babaraya) being part of the Group in carrying out their nefarious designs,” SEBI said in its order dated December 28.
“The noticee being part of the Group along with the Master carried out transactions in the market that led to a rise in the volume of the scrip and thereby induced the gullible investors,” it added.
SEBI said it had found that Master transferred 2.13 lakh shares representing 42.60 per cent stake by off market transfers to as many as 22 entities during the investigation period.
In a separate order dated December 31, SEBI has disposed of case the against REI Agro related to allegations of not complying with summons issued by regulator’s investigation authority.
The investigation authority had sought information and documents from the company regarding its preferential allotment of shares to Hi-Fi Tradecom.
“From the foregoing, I find that the noticee (REI Agro) had complied with the summons issued during the investigation period and has attempted to furnish almost all the information as requested by the investigating authority,” SEBI said.
Regarding certain documentary evidence related to loan arrangements between REI Agro and Hi-Fi Tradecom, the regulator conceded that the said arrangements were oral in nature and therefore, no evidence could be provided by the company.
“In practice, many corporates and firms do enter into several arrangements with respect to funds, shares, etc., and these arrangements are oral and based on trust. It is indeed very difficult to have any documentary evidence in such cases,” the regulator said.