Dhyana Finstock case: Sebi slaps Rs 6.55 cr fine on 81 entities

By: |
August 12, 2020 5:20 PM

The regulator examined KYC (Know Your Customer) documents, common directorship, fund transfers and off-market transfers of shares and found that these entities were inter-connected with each other.

The matter pertains to issuance of shares of Dhyana Finstock on preferential basis in 2013.The matter pertains to issuance of shares of Dhyana Finstock on preferential basis in 2013.

Markets regulator Sebi has imposed a penalty totalling Rs 6.55 crore on 81 entities for misusing issuance of stocks on preferential basis by Dhyana Finstock.

The regulator examined KYC (Know Your Customer) documents, common directorship, fund transfers and off-market transfers of shares and found that these entities were inter-connected with each other.

The matter pertains to issuance of shares of Dhyana Finstock on preferential basis in 2013.

The Securities and Exchange Board of India (Sebi), which had conducted a probe into the dealings in Dhyana Finstock’s stocks, found that the company had issued 64,25,000 shares of Rs 10 each under preferential allotment to 49 entities in November 2013.

Out of 49 preferential allottees, the company related entities had provided money to several entities for purchasing shares.

The Sebi probe found that preferential allotment of shares was done by Dhyana Finstock, its directors and company-related entities in a fraudulent manner.

In addition, they were also involved in creating a misleading appearance of trading in the scrip by funding certain entities to buy the shares (by posing as counter parties) from preferential allottees who sold their shares.

Besides, the entities, who were alloted shares in preferential allotment, indulged in price manipulation.

Sebi said entites, having connection with Dhyana Group, indulged in price manipulation of scrip to artificially ramp up the prices.

By indulging in such trades, the entities violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, Sebi said in its 178-page order passed on Tuesday.

Accordingly, the regulator has levied the penalty on 81 entities, including Dhyana Finstock, ranging from Rs 5 lakh to Rs 25 lakh.

Earlier, in an interim order passed in 2016, Sebi had restrained certain entities from accessing the securities market till further directions in the matter.

Besides, BSE was directed to withhold the pay-out of funds for trades executed in the scrip of Dhyana Finstock.

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