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Sebi repeals trading ban on 14 entities in money laundering case

Regulator Sebi has lifted trading ban on 14 entities which were alleged to have misused the stock market platform for money laundering and tax evasion as it did not find any “adverse evidence” against them.

The regulator’s order came in the case related to Kamalakshi Finance Corporation Ltd (KFCL) wherein various entities were prima-facie found to have artificially inflated the company’s share prices to make illegal gains.

So far this month, the watchdog has revoked trading restrictions imposed on more than 750 entities in different cases to related to making fictitious long term capital gains (LTCG).

In the latest matter related to KFCL — presently known as Gromo Trade & Consultancy Ltd — Sebi had barred 33 entities from the securities market in February 2015 till further orders. Later in August 2016, two entities were let off while the proceedings continued against 31 others.

Sebi had conducted an examination into dealings in KFCL shares during the period from January to December 2014 after a huge rise in share price was noticed.

The regulator prima-facie had found that KFCL and persons in charge of its affairs created preferential allotment of shares as a mode to provide fictitious LTCG to its preferential allottees so as to convert their unaccounted income into accounted money.

In the process, the Kamalakshi Group and certain suspected entities artificially increased the price of the scrip and devised a scheme to misuse securities market system for making illegal gains and convert ill-gotten gains into genuine one to avail LTCG benefit, according to Sebi’s prima- facie findings.

“… Investigation did not find any adverse evidence/ findings” with regard to the role of 14 entities in respect of price manipulation in the scrip of KFCL, Sebi said in an order dated September 22.

Subsequently, the restrictions imposed on these 14 entities since February 2015 have been revoked.

In the latest order, the regulator said the directions that were issued against the remaining 17 entities would continue.

Other LTCG cases where the regulator revoked its restrictions include those pertaining to Kailash Auto Finance, Radford Global case, Pine Animation, First Financial Eco Friendly Food Processing Park, Esteem Bio Organic Food Processing and Channel Nine Entertainment.

In a separate order, Sebi revoked trading curbs on three entities after it did not find any evidence against them with respect to their role in the manipulation of the shares of PM Telelinks Ltd (PMTL) and 8K Miles Software Solutions Ltd.

The watchdog had conducted an examination into the dealings in the shares of PMTL and 8K Miles for the period from August 2011 to September 2012 and January to September 2012, respectively, following an unusual price movement in the scrip of the firms.

In this case, the Securities and Exchange Board of India (Sebi) had restrained 13 entities from accessing the securities market through an interim order in April 2013 till further directions.

The regulator said in the order that “there are no adverse findings/inference” against three entities with respect to their role in the manipulation of the scrip of PMTL and 8K Miles.

Accordingly, the watchdog revoked the restrictions imposed on three of the 13 entities.

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