Sebi slaps Rs 1.25 cr penalty on 11 entities in REI Agro case

The entities and promoters of the company have been accused of fraudulent trading

Market regulator Sebi has imposed a total penalty of Rs 1.25 crore on 11 entities including three promoters of REI Agro for alleged fraudulent trading in the company's shares during 2004-2005.

Sebi has slapped a fine of Rs 10 lakh each on three promoters of REI Agro -- Kaushalya Devi Jhunjhunwala, Sangita Jhunjhunwala and Suruchi Jhunjhunwala.

The regulator has also imposed penalties on eight other entities connected to REI Agro.

It imposed Rs 15 lakh fine each on -- Harrington Commercial, Rajkamal Marketing, Raksha Financiers, Sangita Securities, Hawks Financiers and Pingle Marketing.

Other two entities Hi-Fi Tradecom and Right Fiscal Management were slapped with penalty of Rs 18 lakh and Rs two lakh, respectively.

The regulator has alleged the entities for matching their trades among themselves through synchronised orders that led to artificial volume in shares of REI Agro and also influenced its share price.

"...It is clear that the noticees had synchronised their orders to execute trades within the group. The same created false and misleading appearance of trading in the scrip and generated artificial volume," Sebi said in an order issued yesterday.

In addition, the regulator said the promoters were holding directorship in the Harrington Group entities which suggested that "they had executed the trades with a common objective by synchronised/structured orders".

Sebi also said it is penalising one of the entity's Hi-Fi Tradecom for its failure to comply with summons issued by Sebi's Investigating Authority.

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.

The investigation revealed that shares of the company witnessed wide fluctuations in price and volume at BSE and NSE during the period.