Sebi has imposed a total fine of Rs 10 lakh on three entities for failing to provide information sought by the market regulator in a case related to alleged share price manipulation by Sanjay Dangi group and associates.
In three separate orders dated January 28 this year, Sebi (Securities and Exchange Board of India) has imposed a penalty of Rs 5 lakh on Basukinath Highrise, Rs 3 lakh on Techbuild Impex and Rs 2 lakh on Ragini Merchants.
Sebi said the three entities did not furnish various details sought by the regulator like required bank statements and details of shareholders on a quarterly basis, complete details as well as the basis of investments in the dummy companies created by Murli Industries, among others.
The regulator was investing whether there were any relation between these firms and other entities who were also shareholders of dummy companies.
"I note that not submitting complete details to the summons despite having the same appears to be a deliberate action/strategy on the part of the noticee (Basukinath Highrise, Techbuild Impex and Ragini Merchants) to not cooperate with the regulatory mechanism," Sebi's Adjudicating Officer Piyoosh Gupta said in a similar worded order.
"...such non-cooperation and default definitely compromises the regulatory framework and acts as an impediment to the functioning of the investigation process of Sebi. Further, any delay or hurdle in investigation due to non cooperation by any entity is detrimental to the interest of investors in securities market," he added.
According to Sebi's norms, if any entity fails to furnish any document sough by the regulator is liable to penalty.
The regulator had passed an interim order in December 2010 banning Dangi, his associates and promoters of four companies Murli Industries, Ackruti City, Welspun Corp and Brushman Indiaż from dealing in the equity markets following allegations of price manipulation.
The Sebi order had followed an income tax department probe. The regulator's probe had revealed a well-planned strategy to manipulate the share price of the company before the issuance of the Foreign Currency Convertible Bond (FCCBs).