Usher Agro case: Sebi bans Nirmal Kotecha for two years

Markets regulator Sebi on Wednesday imposed a two-year ban on Nirmal Kotecha for executing fraudulent trades in the scrip of Usher Agro Ltd and violating other market norms.

"Noticee, Nirmal Kotecha,...shall be restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or shall not associate with the securities market in any manner, whatsoever, for a period of two years," Sebi said in a 17-page order.

Earlier, the regulator, through orders in March 2018 and October 2018, had imposed ban of 14 years and 1 year respectively on Kotecha with respect to fraudulent trades in Pyramid Saimira Theatre shares.

In the view of the same, Sebi noted that the restriction imposed on him on Tuesday shall run concurrently with the period of debarment imposed earlier.

Sebi's directions follow an investigation conducted by it between August 2008 and December 2008 after it noted that the scrip of Usher Agro rose from Rs 107.30 on August 19, 2008 to a high of Rs 208.75 on September 11, 2008 and then continuously declined to Rs 84.05 on December 31, 2008.

The regulator noted that Kotecha was part of a group comprising 12 entities which indulged in self trade by purchasing scrips accounting for 15.20 per cent of the market volume and then sold 15.13 per cent of the market volume.

The execution of self trade resulted in no change of beneficial ownership and created artificial volume in the scrip of Usher Agro, which gave a false and misleading appearance of trading in the shares.

Thus, he violated Prohibition of Fraudulent and Unfair Trading Practices norms.

In addition, Kotecha held shares in various beneficiary accounts maintained with various depository participants and held less than 5 per cent of equity in each account, during the quarter ended March 31, 2009.

However, by aggregating the shareholding of all his accounts, his shareholding exceeded 5 per cent of total share capital of Usher Agro and he was required to make requisite disclosures under Prohibition of Insider Trading and Substantial Acquisition of Shares and Takeover norms, but he failed to do so, the regulator said in its order.