SAT upholds Sebi's order against Lucky Holdings, reduces fine

The Securities and Appellate Tribunal (SAT) has upheld a Sebi's order against Lucky Holdings in a case related to alleged share price manipulation of Murli Industries by Sanjay Dangi and associates.

However, SAT has reduced the penalty imposed by Sebi on Lucky Holdings to Rs 2 lakh from Rs 5 lakh.

"We uphold the impugned order dated February 28, 2013, as passed by the (Sebi's) adjudicating officer," SAT said in its order dated July 1.

Sebi had imposed fine on Lucky Holdings not providing details sought by its regarding alleged share price manipulation of Murli Industries by Sanjay Dangi and associates.

"However, keeping in view the facts and circumstances of the case, we find that the penalty for partial non-compliance issued by the investigating officer is on a higher side; and exercising our discretion, we modify the impugned order by reducing it to Rs 2 lakh," the SAT order said.

The case relates to findings by Income Tax Department that ten firms incorporated by Murli Industries Ltd (MIL) were "dummy". These companies had together cornered a large part of the shareholding of MIL.

Further, ITD noted that the price of the MIL scrip was manipulated by Sanjay Dangi and associates for the purpose of issuing Foreign Currency Convertible Bond (FCCB) at a higher price than what was the correct price.

Following a reference by ITD, Sebi had initiated its own enquiry in the share price manipulation of MIL.

To ascertain the exact role played by various entities including the 10 dummy firms and their shareholders, Sebi had sought details from Sagar Fintrade, a merged entity of Lucky Holdings.

Despite duly receiving summons, Sagar Fintrade failed to submit complete detailed information as required vide summons and was penalised for the same by Sebi.