Sebi fines three individuals in 20% returns promise case

Regulator Sebi today imposed fine of Rs 5 lakh each on three persons who had allegedly promised another individual a 20 per cent return in six months through stocks on an investment of Rs 6 crore nearly 10 years ago.
While Sebi's investigation did not bring out "the disproportionate gain or unfair advantages" to the three noticees, they were issued summons on multiple occasions and they failed to provide the information.
"This indicates the repetitive and wilful nature of their offence," Sebi said in an order while adding that loss to investors as a result of non-submission of information by noticees was brought out in the investigation report.

Accordingly, Sebi has asked the three individuals -- Madhu Jhunjhunwala, her husband Sudhir Jhunjhunwala and another individual Sanjay Talati -- to pay Rs 5 lakh each.
The regulator had conducted investigation in the scrip of Agnite Education, formerly known as Teledata Informatics, and possible violation of various Sebi provisions during March-December 2007, based on the reference from the Economic Offences Wing of the Brihan Mumbai Police.
The EOW informed the Sebi that Talati was known to Jimmy Pande, the individual in question, for 10 years.

Talati introduced Madhu and Sudhir Jhunjhunwala as experts in the securities market and the couple promised Pande minimum 20 per cent returns on investments with them within 6 months.

Pande transferred Rs 6 crore through his companies in the account of Madhu Jhunjhunwala in March 2007.
"After considerable time when Madhu and Sudhir Jhunjhunwala failed to return the amount, Jimmy Pande lodged complaint with the EOW, Brihan Mumbai Police," stated the Sebi order.
During the course of investigation by the EOW, Sudhir Jhunjhunwala stated that Talati had started visiting his office since December 2006 and began trading through their accounts.
Jhunjhunwala also said Rs 6 crore were deposited in Madhu's account by the management of Teledata Informatics Ltd and Pande is their office bearer. He also alleged that Talati indulged in insider trading while trading through his account.

Sebi then issued summons to the Jhunjhunwala couple and Talati to provide certain information pertaining to their dealing in the shares of Teledata Informatics.
The couple represented before Sebi that they were engaged in the stock market to earn their living and they were falsely induced by Talati.
The couple said they were "only financiers to the entire deal and it was Talati who was the key person who had done all the business, transaction and deals..." and they actually incurred huge losses themselves in the deal.
While no reply was received from Talati, all the three noticees failed to appear for personal hearing thereafter.

Sebi said the three individuals were issued summons on multiple occasions and they failed to provide the information.
"If persons are allowed to flout the summons issued to them during the course of the investigation, Sebi will not be able to discharge its statutory obligations in protecting the interests of the investors and safeguarding the integrity of the securities market," the regulator said.
Sebi further said that as the three individuals did not provide the information, it "thwarted" the attempts of the regulator to effectively gather vital evidence for the timely conclusion of the investigation proceedings.