Sebi bans 3 persons for 7 years for creating sham identities to transact in mkt

Regulator Sebi has barred three persons from capital markets for seven years for creating sham identities and cornering shares in IPOs at the cost of genuine investors.

Besides, they have been asked to disgorge unlawful gain of about Rs 7 lakh, including interest.

Babulal M Dugar, Manoj Kumar Dugar and Vinod Kumar Dugar are the three persons facing ban.

The Securities and Exchange Board of India (SEBI) received a reference alleging that certain entities possessed multiple Permanent Account Number (PAN) cards and had opened multiple demat accounts, trading accounts and bank accounts using forged documents.

Pursuant to this, the regulator conducted a probe which prima facie revealed that these three persons had transacted in the Initial Public Offers (IPOs) during 2002 to 2012.

It found that these persons created sham identities. Further, these sham identities were allotted shares in several IPOs, which were subsequently transferred to these persons and their relatives.

Sebi noted that there were a total of 27 IPOs during 2004 to 2011, where sham identities were allotted shares.

"Noticees (Dugars) by creating false identities and cornering shares in IPOs at the cost of genuine investors have indulged in fraudulent and unfair trade practices, thereby violating ...PFUTP Regulation," the regulator said in an order passed on Friday.

Accordingly, Sebi said Dugars shall not buy, sell or deal in the securities market in any manner whatsoever, or access the securities market, directly or indirectly for a period of seven years".

Further, they have been asked to jointly and severally disgorge the unlawful gain of over Rs 3 lakh, along with interest of more than Rs 3.95 lakh.

In case they fail to comply with the direction, these persons will be restrained from the capital markets for a further period of five years.