The market regulator in its show cause notice had charged Aditya Infosoft CMD Anil Patel and two directors - Jasmin Patel and Kokilaben Patel - of acting in concert with one Atul Shah and manipulating the firm's share price.
As per Securities and Exchange Board of India (Sebi), Atul Shah is the proprietor of Charmi Investments Ltd.
Sebi said that it "...hereby restraints the noticees i.e, Atul Shah, Anil Patel, Jasmin Patel and Kokilaben Patel from accessing the securities market and also prohibit them from buying, selling, and otherwise dealing in securities market, directly or indirectly, in whatsoever manner for a period of three years from the date of this order."
Sebi said they manipulated the share price of the firm and "had dealt in securities in a fraudulent manner and indulged in activities which were calculated to create false and misleading appearance of trading in securities market".
It added that they had indulged in "publication/report of false information through false and misleading disclosures/ announcements as ploy to manipulate the price of the scrip."
Sebi also said that "the role of Atul Shah in his plan, device and artifice to manipulate the price of AIL (Aditya Infosoft) as stated by Anil Patel is established and he has also contravened the provisions of...PFUTP Regulations (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market)".
The regulator had conducted a probe in respect of the trading in the shares of Aditya Infosoft for the period from December 3, 2003 to January 23, 2004.
According to Sebi, during the investigation period the scrip of Aditya Infosoft was illiquid and it was not even traded for more than a month before the trading in the scrip resumed on December 4, 2003. The period witnessed a sharp rise in the share price of the company.
The probe also found that certain disclosures by the company in its quarterly financial results were false and had circulated numerous misleading information on its website, among others.