Sebi confirms ban on 19 entities in tax evasion case

Regulator had found that these entities acted in connivance for implementation of dubious plan leading to misuse of stock exchange mechanism

Markets regulator Sebi on Wednesday confirmed its interim order banning 19 entities in a case related to tax evasion and money laundering through misuse of stock exchange mechanism while detailed investigation is on against others.

The Securities and Exchange Board of India (Sebi), via an interim order dated June 29, last year had prohibited four companies and 235 other entities, including the aforesaid 19, from the securities market for making Rs 614 crore illegal gains through suspected money laundering and tax evasion activities.

The order came after it had found manipulations in the scrips of four companies – Eco Friendly Food Processing Park, Esteem Bio Organic Food Processing, Channel Nine Entertainment and HPC Biosciences.

A huge rise in the traded volumes and prices of these scrips – during January 1, 2013 to December 31, 2014 – led to the regulator initiating a preliminary inquiry.

In an order passed on Wednesday, Sebi Whole-Time Member Rajeev Kumar Agarwal said he did not find any reason to revoke or modify the directions of the interim order passed in June last year against the noticees.

Accordingly, the regulator has confirmed interim order passed against these entities.

"The interim order dated June 29, 2015, shall remain in force till further directions," Sebi said in an order on Wednesday.

It further said detailed investigation in the matter is still in progress.

Among the 19 entities are Madhuker Dubey, Satendra Kumar, Core Capital Services, Mayfair Infosolutions, Chetan Prakash, Asifa Jamal, Prakash Gupta and Abhishek Gupta.

The regulator had, prima facie, found that 19 entities acted in connivance for implementation of dubious plan, device and artifice, leading to misuse of stock exchange mechanism to artificially increase price and volume of the scrips to provide illegitimate gains to the preferential allottees and pre-IPO Transferees in order to claim LTCG (long-term capital gain) benefits.