SEBI Imposes Rs5 Lakh Penalty on Entity for Fraudulent Trading in Allied Computers International
Moneylife Digital Team 25 May 2022
Capital markets regulator Securities and Exchange Board of India (SEBI) on Tuesday imposed a penalty of Rs5 lakh on an entity for indulging in manipulative trade practices in the shares of Allied Computers International (Asia) Ltd more than a decade ago.
The order came after SEBI conducted an investigation in the scrip of Allied Computers International (Asia) Ltd (ACIL) on the basis of a reference received from the income-tax (I-T) department that certain entities could have manipulated the price in the scrip of ACIL as a part of a larger scheme linked to long-term capital gains scam during the period from November 2007 to September 2012.
The price of the scrip increased from Rs21.00 on 23 November 2007 to Rs74.35 on 18 December 2007 which was the highest closing price during the IP. Subsequently, the price decreased from Rs75.55 on 19 December 2007 to Rs4.90 on 18 December 2008. Pursuant to stock split with effect from December 19, 2008, in the ratio of 10 equity shares of Rs1 each for one equity share of Rs10 each, the price of the scrip opened at Rs0.53 on 19 December 2008 and closed at Rs0.72 on 28 June 2010. 
Pursuant to consolidation of equity shares, with effect from 19 July 2010, in the ratio of one equity share of Rs10 each for 10 equity shares of Re1 each, the price of the scrip decreased from Rs7.25 on 19 July 2010 to Rs1.18 on 26 December 2011. Subsequently, the price of  the scrip  increased  from Rs1.26 on 27 December 2011 to Rs6.45 on 04 May2012.Thereafter the scrip price decreased from Rs6.57 on 05 May 2012 to Rs1.30 on 22 September 2012. 
Based on the aforementioned price movement, the IP has been taken as 23 November 2007–22 September 2012 and the investigation period has been divided into 6 patches as follows:
  • Patch-I: November 11 –December 18, 2007 (price rise patch).
  • Patch-II: December 19, 2007 –December 18, 2008 (price fall patch).
  • Patch-III: December 19, 2008 –June 28, 2010 (price rise patch.
  • Patch-IV: July 19, 2010 –December 26, 2011 (price fall patch).
  • Patch-V: December 27, 2011 –May 04, 2012 (price rise patch).
  • Patch-VI: May 05 –September 22, 2012 (price fall patch).
It was found that there were 49 entities, including Ethan Constructions Pvt Ltd, who were connected to each other and traded amongst themselves based on  the analysis of KYC (know-your-customer) details, off-market transfers, MCA (ministry of corporate affairs) documents and bank account statements. These entities had contributed to a rise of Rs 6.84 in the share price from 27 December 2011 to 4 May 2012. The share price hike was 19.53% of market positive LTP (last traded price).
Imposing the fine on Ethan Constructions Pvt Ltd (noticee), the market watchdog said the noticee has contributed to price rise as a buyer and seller and had aided other connected entities by selling shares to increase the scrip price which resulted in manipulation of the securities.
“It is established that the noticee has contributed to substantial and unusual price rise in the scrip of ACIL by trading with other connected entities and significantly contributed to positive LTP,” SEBI  said.
Also, the noticee was restrained from the securities market for a period of three months through an order in August 2021, it added.
Through such acts, the noticee flouted the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.
1 month ago
Just a decade ago! Amazing speed by SEBI!
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