Fraudulent share trading case: 6 entities settle matters with Sebi by paying over Rs 1.5 cr

Six entities have settled with regulator Sebi cases of alleged fraudulent trading in ECE Industries Ltd's shares, by paying over Rs 1.5 crore towards settlement charges.

The entities are Prakash Kumar Mohta, Prakash Kumar Mohta (HUF), Jayantika Jatia, Maitreyi Kandoi, Moulishree Gani and Pratibha Khaitan.

They were alleged to have violated the Delisting of Equity Shares Regulations and the Prohibition of Fraudulent and Unfair Trade Practices norms, Sebi noted in separate settlement orders.

Sebi noted that ECE Industries came out with buyback and delisting offers for its shares during 2016.

It was observed that these entities connected to the promoters of ECE funded the purchase of shares of the firm, a bulk of which was subsequently sold under the buyback offer of ECE and thus contributed towards making the buyback offer successful.

Sebi noted that Prakash Kumar Mohta was a promoter and director of ECE and Jayantika Jatia, also a promoter of ECE, was the director of Universal Prime Aluminium Ltd.

It was alleged that one entity funded by Universal Prime Aluminium and another entity funded by companies related to Mohta for purchase of ECE's shares had contributed to scrip price fall by manipulative trades and placed bid under the delisting process at a price lower than prevailing market price.

However, pending the proceedings, the entities filed separate settlement applications with the regulator proposing to settle the cases without admitting or denying the guilt.

High-powered advisory committee of Sebi considered the settlement terms proposed by the applicants and recommended the case for settlement upon payment of Rs 25.5 lakh each.

The settlement amounts have been remitted by the entities in April 2020.

Accordingly, Sebi in similarly worded separate orders said that "the enforcement proceedings for the alleged defaults... are settled qua the applicant".