Sebi impounds Rs 6-crore from 3 individuals in fraud trade case

New Delhi: Capital markets regulator Sebi has ordered impounding the alleged unlawful gains of nearly Rs 6 crore made by three individuals through fraudulent trading.

The three individuals -- Arvind Babulal Goyal, executive director and compliance officer of InCap Financial Services (IFSL), Abhay Javlekar and Ramesh Dwarkadas Daga -- indulged in synchronised trading among themselves, self-trades and reversal of trades that created artificial volumes in the company's shares.

Securities and Exchange board of India (Sebi) undertook a preliminary examination after it received a complaint stating declaration of dividend within a week by ISFL. The message was circulated by one Prem Agarwal on January 11, 2011.

In a probe, it was found that the three individuals had bought the shares during the investigation period, before the circulation of SMS and subsequently sold shares in the market after the circulation of the SMS.

Thus, they avoided a loss of about Rs 3.7 crore through such manipulative trading.

Whereas the price of the scrip is falling, it appears that three individuals accumulated the shares as a first step and secondly planted the false news, so that the price would increase as they could sell the shares post SMS, thus making profits, the regulator noted.

However, as the price had not increased, these persons with a likely intent to avoid further loss, had sold the shares, it added.

The trades executed by these individuals for undue gains through avoidance of loss were manipulative in nature and in violation of the provisions of the PFUTP (Prohibition of  Fraudulent and Unfair Trade Practices) regulations, Sebi said in an order dated October 20, 2015.

Accordingly, it has impounded "the alleged unlawful gains of a sum of Rs 5.87 crore jointly and severally from persons/entities."

The market watchdog has ordered the three individuals "to provide, within seven days, a full inventory of all their assets and properties and details of all their banks accounts, demat accounts and holdings of shares/securities."

Besides, it has directed them not to dispose off their assets and properties till the amount are credited to an escrow account