Sebi lifts market ban on 34 entities in Dhyana Finstock case

Markets regulator Sebi today lifted the ban imposed on 34 entities as it did not find any adverse evidence against them in a case pertaining to manipulation in Dhyana Finstock Ltd shares.

Violations of PFTUP (Prohibition of Fraudulent and Unfair Trade Practices) were not observed against these entities, the regulator said in an order.

The Securities and Exchange Board of India (Sebi) had conducted a probe into the dealings in Dhyana stocks between June 2014 and July 2015 as there was a significant rise in the traded volume and price of the scrip.

Prima facie, it had found that promoters, directors, exit providers, preferential allottees and promoter-related entities artificially increased the volume and price of the scrip. They misused securities market system for making illegal gains and to convert ill-gotten gains into market gains to avail long term capital gains (LTCG).

Accordingly, Sebi, through an interim order passed in June 2016, had restrained 76 entities including Dhyana and its promoters and directors from the capital markets till further directions.

However, order passed against one entity was revoked later, while the directions issued against the remaining 75 entities were confirmed through several orders passed by Sebi between August 2016, and May, 2017.

Following the interim order, Sebi had conducted a detailed investigation of the entire scheme employed in the instant matter, connection amongst the debarred entities, funds used for the price manipulation of the scrip of Dhyana so as to ascertain the violation of securities laws.

After completion of the probe, the regulator said it did not find any adverse evidence against 34 entities, that were identified as preferential allottees, exit providers and entities connected to Dhyana in the interim order.

Besides, it "did not find their any role in price manipulation and volume manipulation in the scrip of Dhyana. Hence, violation of provisions of Sebi Act, PFUTP Regulations, etc, were not observed".

Sebi noted that the directions issued against these 34 entities through interim order and subsequent several confirmatory orders "need not be continued".

Accordingly, the regulator, in an order dated April 24, has revoked the confirmatory orders passed against these 34 entities with immediate effect.

With regard to the remaining 41 entities, the regulator said, "violations under Sebi Act, PFUTP regulations, etc., were observed and Sebi shall continue its proceedings against them".