Sebi lets off Dhanlaxmi Cotex with a warning

Market regulator Sebi today let off Dhanlaxmi Cotex with a warning to be "cautious" in its dealing as a securities market participant, saying any more violations by it will attract stringent action.
The case relates to fraudulent trade practices in the shares of Soundcraft Industries Ltd (SIL), on BSE and NSE, from July 2, 2001 to January 2, 2002.
Probe conducted by Securities and Exchange Board of India (Sebi) found that Dhanlaxmi Cotex was involved in creating a false and misleading appearance of trading in the shares of SIL so as to establish and maintain the price of the scrips at a specific level through structured and circular trades.

According to the market regulator, the whole scheme of manipulation had been engineered and perpetrated by SIL's Chairman and Managing Director Rajkumar Chainrai Basantani.
Noting that there was "absence of sufficient evidence" against Dhanlaxmi Cotex, Sebi in an order today let off the entity with a warning "to be cautious in its future dealings and exercise due care and diligence in the conduct of its dealings as a securities market participant".
"Any future instance of violation of Sebi Act, rules and regulations framed there under shall be dealt with stringently," it added.

Among others, Sebi said there was lack of evidence to show that "there was a meeting of minds between the noticee and other connected entities and involvement of the noticee in aiding and abetting Rajkumar Basantani in the creation of artificial volume with the objective to fix the price of the scrips of SIL during the investigation period".

However, the regulator said "the noticee has participated in the circular trades as well as structured deals in the scrip of SIL on many occasions as have been discussed in the preceding paragraphs, which eventually resulted in the creation of volume in the scrip of SIL".
Sebi had initiated a probe in the case after noticing sharp fluctuations in the price and volume in the SIL shares at both BSE and NSE.