SEBI imposes a 3-year ban on five entities and fines them Rs.50 lakh

In a decisive move to curb market manipulation, the Securities and Exchange Board of India (SEBI) has banned five entities from participating in the securities market for three years. Additionally, SEBI has levied a total penalty of Rs.50 lakh on these entities for their involvement in fraudulent trading activities.

Entities Involved

The penalized entities include NNM Securities, a registered stock broker, along with Miker Financial Consultants, Vibhuti Commodities, Festino Vincom, and Nikunj Anilkumar Mittal. Each of these entities has been fined Rs.10 lakh. SEBI has also directed them to pour out wrongful gains amounting to Rs.7.49 crore, with an interest rate of 12% per annum from July 2022 until full payment.

Violations and Investigation

The violations pertain to manipulative trading practices involving the stock of Bhatia Communications and Retail (India) Ltd. SEBI’s investigation revealed that these entities colluded to create a false trading appearance, misleading investors into buying shares at inflated prices. This manipulative trading primarily occurred during the pre-split period of Bhatia Communications’ stock.

Fraudulent Scheme

SEBI’s investigation was triggered by a complaint in July 2022, which alleged that certain entities were manipulating the stock price through deceptive practices. The probe confirmed coordinated efforts to artificially inflate the stock price and volume before a stock split in February 2022. Post-split, the entities offloaded their shares at inflated prices, resulting in significant wrongful gains.

Regulatory Action

G Ramar, SEBI’s officer overseeing the case, has mentioned the severity of the manipulative activities, stating that such practices undermine market integrity and must be addressed strictly. SEBI’s actions aim to deter similar fraudulent activities and maintain the transparency and fairness of the securities market.

Conclusion: This enforcement action showcases SEBI’s commitment to protect investor interests and ensure market integrity. By imposing financial penalties and market bans, SEBI sends a strong message against market manipulation and fraud to the world out there.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.