Mumbai: A special SEBI court has convicted a 64-year-old woman from Nallasopara after she failed to pay the Rs 5 lakh penalty imposed on her for indulging in circular trading of shares of Prraneta Industries Ltd (PIL). The court, considering her age, imposed a fine of Rs 7 lakh on her.
While showing leniency to Shila Suryavanshi, the court observed, “The accused is a lady. She is 64 years old. Considering the nature of gravity of the offence and looking to the age and ailments of the accused, I found that custodial incarceration would not be the proper punishment to be awarded to the accused, and ends of the justice will be met by imposing fine amount.”
The court said after recovery of fine amount the rest of the money should go to SEBI as compensation.
The SEBI conducted investigation pertaining to affairs relating to buying, selling or dealing in the shares of PIL for the period of January 2015 to May 2015 and found violations of Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market Regulations in the dealing of shares of PIL.
During the investigation period, the price of the scrip of PIL fluctuated widely with erratic trading volume. The investigations revealed that a group of clients, including Suryavanshi, manipulated the market in the scrip of PIL. The group was a major net purchaser of the scrip during the period of investigation. The group transferred the shares bought from the market to various beneficiary accounts through off-market transactions, who in turn sold the shares in the market.
The noticee and some of the other entities mentioned above allegedly indulged in circular trading with one leg of the transaction in off-market, inputting orders at incrementally higher prices than the previous traded prices and thereby manipulated the market in the scrip of PIL.
SEBI said the price of PIL increased from Rs18.50 on January 10, 2005, to Rs 83.75 on March 14, 2005, posting a rise of 353% in 44 trading days. Then the price of the scrip fell from Rs 80.50 on March 15, 2005, to Rs 39.85 on March 24, 2005, around 50% in eight trading days.
Thereafter, from March 25, 2005, onwards, the price of the scrip again started to move up and touched a high of Rs 80.35 on April 8, 2005, a day prior to the subdivision of the shares of the company on April 11, 2005. On April 11, 2005, the price of the scrip opened at Rs 8.55 and gradually touched a high of Rs 12.06 on May 12, 2005, a rise of 45% in 23 trading days. The scrip was traded with erratic volume during the investigation period.
Thus, SEBI, by an order dated February 29, 2012, imposed a penalty of Rs5 lakh on Suryavanshi and others. The SEBI claimed that the order was communicated in July 2012 to her but as she failed to comply with it, criminal prosecution was instituted on September 11, 2014. The court held her guilty of not paying the fine amount.
