Sunteck Realty case: Sebi reduces penalties on five entities

Markets regulator Sebi on Friday imposed penalties totalling more than Rs 3.8 crore on seven entities, including six individuals, for carrying out circular trades in the shares of Sunteck Realty Ltd.

The total penalty imposed on five entities is lower than the amount slapped on them through an order passed in December 2019.

As per the latest order, the penalties have been imposed on five entities equal to the ill-gotten gains made by them while in the case of two others, the fine is Rs 5 lakh each.

In 2019, Sebi had slapped fines totalling over Rs 14.4 crore on the five entities, an amount that was twice the ill-gotten gains made by them.

According to the order passed on Friday, a fine of Rs 2,85,57,592 has been slapped on Chiranjilal Jayaram Vyas while it is Rs 57,71,256 on Namdeo H More. Others who are facing penalties are Kishore Bhikaji Giri (Rs 3,56,506), Deendayal M Bohara (Rs 23,46,538) and Kishorilal Amrutlal Bissa (Rs 1,27,888).

Sebi had passed an order against the entities in December 2019 and they moved the Securities Appellate Tribunal (SAT) against the ruling.

In September 2021, the SAT remanded the case to Sebi for reconsideration regarding the calculation of the unlawful gains made by the entities.

In both orders, passed in December 2019 and Friday, the fines imposed on two entites was Rs 5 lakh each.

While Jitendra Harivansh Joshi and Shripal Shares and Securities Ltd have incurred losses, they were part of the group and played an active role in facilitating the manipulation in the scrip of the company.

"Hence their violation is also serious. Therefore, considering the role played by them, penalty of Rs 5,00,000 each is imposed on them," the order said.

Sebi's investigation had revealed certain abnormal dealings in the shares of the company by certain entities/persons which were indulging in circular trades through the exchange as well as using the depository's transactions route in order to create artificial volumes in the scrip.

The company was formerly known as Insul Electronics Ltd.

"It is pertinent to mention that Hon'ble SAT vide its order dated September 27, 2021 has upheld the fraudulent activities carried out by the noticees," Sebi said in the order on Friday.

The noticees are the seven entities.

"It is worthwhile to note that even when these known/related parties were selling in the market in some cases the entities were also buying these shares from the very same parties in the market. Hence the shares sold by the front entities which created the artificial volume is to be taken into account for calculation of unlawful gain by the noticees," the order said.