Sebi slaps total Rs 57.2 lakh fine on SVC Resources, 17 other entities for disclosure lapses

They violated Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms. In another order passed on Friday, Sebi found that the promoter of Tulip Telecom Ltd, Cedar Infonet Pvt Ltd, failed to comply with SAST norms and slapped a fine of Rs 7 lakh on the firm for failing to make disclosures regarding creation and invocation of pledge in Tulip's scrip.

Markets regulator Sebi on Friday levied a total fine of Rs 57.2 lakh on SVC Resources and 17 other entities for disclosure lapses with respect to acquisition and sale of the firm's shares, among others. The entities violated Prohibition of Insider Trading (PIT) and Substantial Acquisition of Shares and Takeovers (SAST) norms.

The violations of the disclosure requirements by the entities happened continuously over a long period of time from 2006 to 2014, Sebi noted in an order. "This continuous chain of non-compliances in disclosure and open offer obligations by the promoters of a listed entity cannot be viewed lightly, as the same adversely affects the disclosure-based regime of the securities market and the rights of investors at large," the regulator said.

After a probe, Sebi observed that there was a change in management and control of SVC Resources. The acquirers were deemed to be person acting in concert with the continuing promoters and accordingly, they were under obligation to make public announcement to acquire shares under SAST regulations. The probe found that certain entities had failed to disclose acquisition of SVC's shares to the firm and exchanges while some other did not make requisite disclosures regarding sale of the company's shares.

Further, non-disclosure of creation and invocation of pledge of shares of the firm by certain entities has also been recorded. Sebi found that the firm had failed to make requisite disclosures about the change in the shareholding of the promoters and also failed to comply with relevant market norms with respect to preferential allotments done by the firm on two instances.

Other violations include non-disclosure by entities on acquisition of shares made through preferential allotment and failure to disclose change in shareholding in the firm. For violating market norms, Sebi levied fine on the entities in the range of Rs 1 lakh to Rs 6.6 lakh each.

Apart from SVC Resources, the entities include Lemon Diversified Fund, Sushanku Enterprises, Subhtex India, Naaz trading and Finance (now known as Powerhouse Fitness). Through three separate orders, Sebi levied a penalty of Rs 5 lakh each on six individuals for fraudulently trading in the scrip of Grandma Trading and Agencies.

During the investigation period between April 2012 and March 2015, the individuals though their trades manipulated the price of the scrip and created a misleading appearance of trading in the shares, Sebi noted. They violated Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) norms.

In another order passed on Friday, Sebi found that the promoter of Tulip Telecom Ltd, Cedar Infonet Pvt Ltd, failed to comply with SAST norms and slapped a fine of Rs 7 lakh on the firm for failing to make disclosures regarding creation and invocation of pledge in Tulip's scrip. Sebi said the firm "failed to make disclosures to the company and the BSE for transactions regarding creation of pledged shares i.e. August 31, 2012, September 14, 2012 and September 18, 2012".

It also added that the company also failed to make disclosures to the company and the BSE regarding "invocation of pledged shares in August 24, 2012, September 10, 2012, September 14, 2012, September 17, 2012, September 18, 2012 and September 28, 2012". Separately, the markets watchdog has slapped a fine of Rs 5 lakh each on four individuals for creating a misleading appearance of trading in shares of Lifeline Drugs and Pharma Ltd (now known as Arihant Multi Commercial Ltd) and contributing to manipulation in scrip price.

"It is established that the Noticees manipulated the price of the scrip and created a misleading appearance of trading in the scrip by trading in minimum lot above LTP,(last traded price) which are not trades executed in normal course of trading and investment in securities market," Sebi said. Noticees refer to the four individuals who carried out fraudulent trading and thereby violated PFUTP Regulations.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)