Market regulator Securities and Exchange Board of India (SEBI) imposed a penalty of Rs2.18 crore on the 18 entities while ordering them to disgorge Rs2.24 crore, the illicit profits earned through fraudulent trading activities in the scrip of Continental Seeds and Chemicals Ltd (CSCL).
While barring the 18 entities for one to two years, the market regulator directed them to pay an interest of 12% on the illicit profit.
Those penalised by SEBI include: Praveen Rastogi (noticee 1), Sachin Rastogi (noticee 2), Praveen Aroma Pvt Ltd (noticee 3), Continental Seeds and Chemicals (noticee 4), Mohd Idrees, proprietor of Tirupati enterprises (noticee 5), Momin Jahan, proprietor of Jahan Enterprises (noticee 6), Mujaffar Khan, proprietor of Shiv Enterprises (noticee 7) , Rajesh Pal (noticee 8), Hari Om Singh(noticee 9), Manish Kumar (noticee 10), Vijay Prakash Gupta, Proprietor of Aashi Traders (noticee 11), Vivek Kumar Varshney (noticee 12), Heena Khatoon, Proprietor of Heena Enterprises (noticee 13), Anju Devi, proprietor of Shree Balaji enterprises (noticee 14 ), Pradeep Narendra Bhatt (noticee 15), Vijay Pujara(noticee 16), Ajaykumar Pujara(noticee 17) and Natvarbhai Vegda(noticee 18).
In the order, Dr Anitha Anoop, chief general manager (CGM) of SEBI, says, "Praveen Rastogi and Sachin Rastogi orchestrated this scheme as they were the directors of Continental Seeds and Chemicals and Praveen Aroma and were also the authorised signatories for fund transfer from accounts of these companies and hence, are liable to be imposed with a higher penalty than other noticees. Further, Mr Bhatt and Mr Pujara have been found to be instrumental in manipulating the Continental Seeds and Chemicals scrip price during the investigation period (IP). Noticees 5, 6, 7, 8, and 12 have been additionally found to have violated section 11C of the SEBI Act by not furnishing information during investigation or not accepting summons for personal appearance. Mr Varshney has also violated regulation 7(2)(a) of the PIT Regulations.”
SEBI investigation uncovered an elaborate scheme, allegedly masterminded by Praveen Rastogi, the managing director (MD) of Continental Seeds and Chemicals and a network of accomplices. The operation led to an extraordinary 664% increase in Continental Seeds and Chemicals share price within two months, from Rs12.90 to Rs98.60, between 5 December 2019 and 5 February 2020. The dramatic price surge significantly harmed retail investors and raised suspicions, prompting SEBI to act.
The investigation revealed a meticulously orchestrated scheme involving multiple trading accounts, referred to as mule accounts, controlled by proxies. These accounts, operated by Vijay Pujara and his associates, manipulated the market by artificially inflating trading volumes and creating a false impression of high demand for Continental Seeds and Chemicals shares.
Further, the funds were funnelled through a web of entities, including Tirupati Enterprises and Shiv Enterprises, to obscure financial trails. These funds facilitated the acquisition of Continental Seeds and Chemicals shares, with subsequent cash withdrawals adding another layer of complexity.
SEBI identified a deliberate effort to sustain a steady price increase, enabling the perpetrators to sell shares at inflated prices, yielding significant profits. Key players, including vendors, customers, and relatives of Mr Rastogi, were directly linked through financial transactions and trading activities.
The regulator’s findings highlighted the involvement of Mr Rastogi and related entities, such as Praveen Aroma, in orchestrating the manipulation. Despite procedural delays and non-cooperation from several accused, SEBI relied on circumstantial evidence and trading patterns to establish collusion.
During the investigation, some accused argued that SEBI’s focus on a limited number of net sellers was flawed, as the market involved many other participants. They also claimed that the alleged manipulation could not have been achieved with the limited funds involved. However, SEBI countered these claims, demonstrating that synchronised trades and last-traded price (LTP) contributions effectively influenced Continental Seeds and Chemicals share prices.
Furthermore, SEBI rejected claims that procedural delays had prejudiced the defence, citing the complexity of the case and the need for thorough scrutiny.
The investigation revealed clear links between the accused parties, supported by shared communication channels, trading behaviour and financial transactions. SEBI’s findings emphasised the coordinated nature of the fraudulent activities, which exploited regulatory gaps and misled investors. Several accused failed to respond to show-cause notices or attend hearings, leading SEBI to consider the charges against them as effectively admitted.
Praveen Rastogi and Sachin Rastogi are restrained from holding any director or key managerial position in a listed company, SEBI-registered intermediary, or associating with such entities for two years.
Praveen Rastogi and Sachin Rastogi have each been fined Rs25 lakh. Vivek Varshney, Pradeep Bhatt and Vijay Pujara have each been fined Rs15 lakh. Praveen Aroma, Continental Seeds and Chemicals, Hari Om Singh, Manish Kumar, Vijay Prakash Gupta, Heena Khatoon and Anju Devi have each been fined Rs 10 lakh. Mohd Idrees, Momin Jahan, Mujaffar Khan, and Rajesh Pal have each been fined Rs12 lakh, while Ajaykumar Pujara has been fined Rs5 lakh.
