Sebi, NSE bar 26 entities from market in Prime Broking case

Banned entities include Prime Securities Ltd as well as Mehul Choksi, promoter of Gitanjali Gems

The Securities and Exchange Board of India (Sebi) and the National Stock Exchange have barred 26 entities from the stock market in connection with a case involving unusual trades handled by Prime Broking in Gitanjali Gems shares.

The banned entities include Prime Securities as well as Mehul Choksi, managing director (MD) and promoter of Gitanjali Gems, according to a notice put on the exchange’s website on Thursday. Choksi denied any involvement with Prime Securities. “I am very surprised... I have nothing to do with Prime. I shall review my options,” he said.

Other barred entities include Albers Diamonds, Avtar Gems, Fender Mercantile, Jaiwanti Mercantiles, Somerset Infrastructure and Sneaking Infrastructure.

According to the circular, the investigation into Prime Broking and the trading activity in Gitanjali is still ongoing. The ban would remain for six months or till the investigation is complete, whichever is earlier, said the circular.

“Pursuant to the decision of Sebi and NSE, which are investigating the trading activity of Prime Broking Company (India) Ltd and trading in Gitanjali Gems Ltd… (the 26 entities) are disabled from trading with immediate effect for a period of six months or till conclusion of investigation by NSE, whichever is earlier,” said the circular.

The exchange had announced on June 28 that it was conducting the investigation and had said that it would be halting the pay-out for the transactions.

It was also to issue a showcause notice to Prime on the matter. In the first week of July, Prime had moved the Bombay High Court, asking for a stay on being declared a defaulter. The Bombay High Court did not grant a stay.

According to sources, the NSE has already disabled the terminals of Prime. N Jayakumar, MD of Prime Securities, did not respond to calls to his mobile. A message seeking comment, too, did not receive a reply.

The share price of Gitanjali Gems was down five per cent to close at Rs 115.6 on Thursday.