Regulator SEBI on Monday imposed a penalty of Rs 35 lakh on three companies for non-compliance with shareholding disclosure, and fraudulent trade in the shares of Banas Finance.
The Securities and Exchange Board of India (SEBI) has levied a fine of Rs 25 lakh on Anmol Finance Company and Rs 10 lakh jointly on Handful Investrade and Banas Finance.
The regulator, based on internal alert, conducted an investigation into the alleged irregularity in Banas Finance stock trading and into the possible violation of SEBI norms during November 2010 to September 2011.
SEBI’s probe found that Anmol Finance has manipulated Banas Finance’s stock price through controlled sale of shares which resulted in creation of new high price for 116 consecutive trading days.
This resulted in increase in the company’s stock from Rs 9.37 to high of Rs 292.60 (hitting circuit filter limit on all trading days), registering a gain of Rs 283.23.
By indulging in such activities, the firm has violated the provision of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.
Further, SEBI noted that Handful Investrade had acquired more than 5 per cent of share capital and was required to make disclosure to the firm and BSE. However, it failed to make the disclosure to the stock exchange.
Besides, Banas Finance did not make the disclosures received from Handful Investrade to the stock exchange.
By not complying with the disclosure, the two companies violated the provisions under SAST (Substantial Acquisition of Shares and Takeovers) and PIT (Prohibition of Insider Trading) regulations.