Sebi slaps Rs 50 lakh fine on Mercury Fund Management

Capital market watchdog Sebi today slapped a penalty of Rs 50 lakh on Mercury Fund Management Company for fraudulent trading in Gennex Laboratories shares.
The case relates to Sebi's probe into false corporate announcements by Gennex (earlier known as Prudential Pharmaceuticals) to create artificial market in the shares and manipulate the same in a fraudulent manner between 2007-08.
The Securities and Exchange Board of India (Sebi) found that Mercury Fund had facilitated Gennex Laboratories promoter Vinod Baid in offloading the firm's shares in the market and in making unlawful gains, based on these announcements.
"I conclude that the noticee (Mercury Fund Management) did facilitate Vinod Baid in offloading the shares in the market and in making unlawful gains thereby, violating...The PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations thus, liable for imposition of monetary penalty," Sebi adjudicating officer D Sura Reddya said in the order.

"I impose a penalty of Rs 50 lakhs...On the noticee -- Mercury Fund Management Company in the matter," Reddy added.
The Sebi probe had found that Gennex had planted certain false positive corporate announcements. On July 4, 2007 just before one corporate announcement, Mercury Fund Management, erstwhile promoter of Gennex had received 9.60 lakh shares of the company Baid in off market transaction.

It was found that Mercury Fund Management had sold 9.30 lakh shares during the period July 5, 2007, to August 22, 2007 during which the price of scrip had increased from Rs 24.10 to Rs 26.55.
It was, therefore, alleged that Baid had transferred the shares in off market to Mercury Fund Management which in turn sold the shares in the market taking advantage of the positive announcement made by Gennex.

In September 2013, Sebi had held Gennex and its directors guilty of indulging in fraudulent practices and restrained them from the capital markets for a period of three years.