Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs95 lakh on 19 individuals involved in manipulative insider trading in securities of Global Infratech and Finance Limited. These individuals are directed to pay the penalty within 45 days either through a demand draft or an online payment facility. In case of failure to pay penalties, SEBI will initiate recovery proceedings.
These 19 individuals are—Harishkumar Kantilal Patel, Vishalkumar Krishnakant Borisha, Pardhi Dhirubhai Khanabhai, Bhavin Natwarlal Panchal, Ankit Jagdishbhai Pithava, Ketan Pravinbhai Panchal, Praveen Kumar, Rameshchandra Chhitubhai Patel, Dhaval Solanki, Divyaben Hiteshbhai Gangani, Ramnath Sharma, Nikhil Kiritbhai Panchal, Amitkumar Navinchandra Patel, Nilay Jitendrakumar Mistry, Amitkumar Bhikhbhai Solanki, Subhashbhai Gelot, Nilesh Kishanbhai Pandya, Manoj Ashokbhai Khalas, and Alpeshkumar Pratapbhai Chaudhari.
Each individual is facing a Rs5 lakh penalty from SEBI—taking the total to Rs95 lakh.
The penalty comes after the regulator's investigation found these individuals committing fraudulent activity in the said shares to mislead investors.
SEBI investigated the shares of Global Infratech and Finance (GIFL) from December 2017 to February 2018 to discover any violations of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms.
In the investigation, SEBI found that these 19 individuals followed a uniform strategy of executing 3,266 trades in a substantial quantity of shares constituting 12.86% of total market volume in a synchronised manner through a large number of trades ranging from 87 to 458 trades on each day for 39 days.
SEBI's adjudicating officer Soma Majumder in the circular said, "I find that such a repeated and uniform strategy of synchronised trades involving substantial quantity of shares was followed by noticees in order to create a misleading appearance of trading, without any change of beneficial ownership, and thus was a fraudulent activity resorted to by noticees in order to mislead investors."
Under SEBI's fraudulent and unfair trade practices, the guidelines highlight "if any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a penalty which shall not be less than Rs5 lakh but which may extend to Rs25crore or three times the amount of profits made out of such practices, whichever is higher." In the case of manipulative trading in Global Infratech, SEBI has penalised these individuals for Rs5 lakh each.
In its order today, SEBI said, "noticees shall remit/pay the said amount of penalty within 45 days of receipt of this order either by way of Demand Draft in favour of “SEBI - Penalties Remittable to Government of India", payable at Mumbai, OR through online payment facility available on the website of SEBI."
It added, in the event of failure to pay the said amount of penalty within 45 days of the receipt of the order, recovery proceedings may be initiated under Section 28A of SEBI Act for the realisation of the said amount of penalty along with interest thereon, inter alia, by attachment and sale of movable and immovable properties of noticees. The 19 individuals are the noticees.