SAT upholds Sebi order against REI Agro promoters, 7 others

This for a case related to fraudulent trading in shares of the company in 2004-05

The Securities Appellate Tribunal (SAT) today upheld Sebi's order against REI Agro promoters and seven other entities in a case related to fraudulent trading in shares of the company during 2004-2005.

 

REI Agro promoters -- Kaushalaya Devi Jhunjhunwala, Sangita Jhunjhunwala and Suruchi Jhunjhunwala -- along with other connected entities were found by a Sebi probe to have indulged in synchronised trades that created artificial volume and also influenced the company's share price.

 

Accordingly, in an order passed in December, last year, Securities and Exchange Board of India (Sebi) had imposed a total penalty of Rs 1.38 crore on the company promoters and seven other entities.

 

Pursuant to the order, the promoters and other entities had approached SAT appealing against the market regulator's ruling in the case.

 

In its order today, SAT said: "...Decision of (Sebi's) adjudicating officer that appellants in connivance with each other have resorted to artificial trade in illiquid REI Agro scrip to facilitate promoters of REI Agro to sell shares of REI Agro through stock exchanges cannot be faulted".

 

SAT noted that the entities "had acted in concert with common design of manipulating volume of trades in REI Agro scrip" and "to facilitate offloading of the company's shares by promoters".

 

"Consequently, penalty imposed upon appellants...Cannot be faulted," it added.

 

The case relates to Sebi's probe into the alleged irregularity in the trading in the shares of REI Agro from August 9, 2004 to September 16, 2005 wherein the firm's shares had witnessed wide fluctuations in price and volume at BSE and NSE.

 

Based on its probe, Sebi had imposed a fine of Rs 10 lakh each on three promoters of REI Agro.

 

Seven entities -- Harrington Commercial, Raksha Financiers, Hawks Financiers, Pingle Marketing, Sangita Securities, Rajkamal Marketing and Hi-Fi Tradecom (now known as Octal Suppliers) -- were slapped with Rs 15 lakh each.

 

Hi-Fi Tradecom was imposed with an additional penalty of three lakhs for failing to comply with regulator's summons.