Sebi bans 24 entities from securities mkt for 3 yrs in Sulabh Engineers matter

The order came after the Securities and Exchange Board of India (Sebi) conducted an investigation in the scrip of

to ascertain whether there were any violations of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms by 150 entities in the company’s stock during the period December 2011 to January 2015.

Following this, Sebi in its order in September 2020, concluded that 102 entities had violated PFUTP rules and restrained them from accessing the securities market. It also disposed of the show-cause notice against 47 other entities.

In its order, Sebi noted that the company had come out with two preferential allotments during March 2011 and March 2012. Thereafter, the price of the scrip was artificially manipulated by promoter directors and connected noticees (24 entities).

These acts of preferential allotments, price manipulation and subsequently selling substantial shares, constitute a scheme. The company, promoter directors and connected noticees, including the preferential allottees, played their respective roles.

“The various stages of the scheme have in effect resulted in inducing the investors to trade in its scrip, for instance, announcement of two preferential allotments by the company in successive years at a premium created a positive sentiment for the company, connected noticees by trading in a specific manner artificially increased the price and lured the investors,” Sebi said.

Through such acts, these 24 entities violated the provision of PFUTP norms. Accordingly, Sebi has barred the entities “from accessing the securities market for a period of three years … and are also prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for the same period”.

In a separate order, the regulator has prohibited Capital Stars Financial Research from taking up any new assignment or contract or launching a new scheme till March 15, 2023, for flouting various provisions of the IA (Investment Adviser) Regulations.

The regulator inspected the books of accounts, records and other documents of Capital Stars Financial Research for the period of April 2018 to January 2020 to examine the compliance of various requirements under Sebi rules.