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Sebi eases restrictions on 32 entities accused of tax evasion, laundering

Firms allowed to deal in govt securities and invest in ETFs

Press Trust of India  |  New Delhi 

The logo of the Securities and Exchange Board of India (SEBI) is pictured on the premises of its headquarters in Mumbai. (Photo: Reuters)

regulator on Thursday relaxed restrictions on 32 entities against whom it had taken action in case of alleged misuse of the stock market platform for evasion and suspected money-laundering activities.

The entities, which were barred from the securities market, have now been given certain relaxations, including permission to deal in government securities and invest in ETF (exchange-traded funds).

Besides, they can enter into delivery-based transactions in cash segment in Nifty 500 index as well as S&P BSE 500 shares, and subscribe to mutual funds.

Among others, these entities can tender shares lying in their demat account in any open offer/delisting under the relevant regulations.

Securities and Exchange Board of (Sebi), in March 2016, had restrained Kailash Auto Finance and 245 other entities (including the 32 entities) from the capital market after they were found to have indulged in a web of 'make- believe' trades to jack up share prices and entrap gullible investors.

They misused the stock exchange mechanism to artificially increase price and volume of the scrips to provide illegitimate gains to the beneficiaries in order to claim long-term capital gains (LTCG) benefits.

Out of them, 32 entities have been given the relaxations now.

In an order passed today, Whole Time Member G Mahalingam has rejected "the prayers of such notices (the 32 entities) for setting aside the interim order for complete removal of restraints imposed by it". However, he has given certain relaxation to them.

As per the order, the entities for whom relaxations have been extended can sell the securities lying in their demat accounts. This will exclude shares of the companies which are suspended from trading by stock exchanges concerned. Besides, sale proceeds lying in the escrow account can be used for certain purposes.

Sebi said, "up to 25 per cent of the value of the portfolio as on the date of the interim order or the amount in excess of the profit made/loss incurred or value of shares purchased to give exit, whichever is higher, may be utilised for business purposes and/or for meeting any other exigencies or addressing liquidity problems etc".

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, July 13 2017. 21:14 IST