Sebi to keep Dave's shares frozen; awaits reports from FIU

Capital market regulator Sebi will keep the securities held by one Anil Dave frozen till the time it receives reports from Financial Intelligence Unit (FIU) and Income Tax Department and accordingly take a final decision.
Securities of Dave, a client of Grishma Securities Private Ltd (GSPL), had been frozen by Sebi during the course of the regulator's investigations in a matter related to role of GSPL in diversion of Tijaria Polypipes' IPO funds.
Earlier this month, Securities and Exchange Board of India (Sebi) had imposed a penalty of Rs 25 lakh on Dave for indulging in synchronised trades and also permitting GSPL to use his account as a conduit for diverting funds to other front entities of the stock broker.

In its latest order on the issue of defreezing Dave's shares lying in the account of Grishma, the market regulator said that "the securities claimed by Anil Dave... Shall remain frozen, till such time a decision is taken by Securities and Exchange Board of India on receipts of reports from Financial Intelligence Unit and Income Tax Department".
As part of Sebi investigations, Dave had submitted that the alleged fund transfer into his bank accounts were part of regular business transactions by a few entities like Shalimar Trading Co, Eleven Impex and Shreeji Corporation.
"There, is no reasonable rationale for the transfer of such huge funds to the banks account of Anil Dave by these entities," Sebi said in the order dated October 27.

The market regulator noted the transfer of funds by these entities could not be determined as they "were not traceable during the course of investigation".

Further, Sebi said that it had referred the matter to FIU and Income Tax Department for necessary examination, "so as to seek clarity on the origin of such funds".
"Their report is still awaited," the regulator said.
Sebi said that "the allegation levelled against Anil Dave, pursuant to the investigation of Sebi that he acted as a conduit and the funds were routed through him was confirmed by the (Sebi's) adjudicating officer in his order".

"In view of such finding, it will be desirable to wait for the reports from the concerned authorities that is Financial Intelligence Unit and Income tax Department on such companies," it added.
Dave had opened a demat account with GSPL in November 2011.
Subsequently, Sebi had issued prohibitory orders against GSPL and also frozen Dave's demat account in December, 2011, as part of its probe into the Tijaria Polypipes' case.