Sebi levies Rs 30 lakh fine on 2 entities over disclosure lapses

NEW DELHI: Capital markets regulator Sebi on Wednesday imposed a penalty of Rs 30 lakh on two entities in a case pertaining to disclosure lapses in the matter of Sterling Green Woods Ltd.

The regulator levied a fine of Rs 25 lakh on Anurag Agarwal and Paksh Developers Pvt Ltd, payable jointly and severally.

In addition, Rs 2 lakh on Anurag Agarwal and Rs 1.50 lakh each on Paksh Developers and Agarwal, according to a Sebi order.

The Securities and Exchange Board of India (Sebi) had conducted an investigation into alleged irregularity in the trading in the scrip of Sterling Green Woods Ltd (SGWL) for the period April to July 2009.

In its order, the regulator noted that Securities Appellate Tribunal (SAT) vide an order dated March 2, 2022, have allowed the appeals filed by the entities and quashed the Sebi order.

Further, the matter was remanded back to the Sebi for passing a fresh order on merits after giving an opportunity of personal hearing to the appellants.

However, the entities have not cooperated with the proceedings and have deliberately delayed the adjudication proceedings by seeking repetitive extensions.

Passing a 34-page fresh order, the regulator found that Agarwal had failed to make disclosures with respect to the acquisition of the shares of SGWL on two occasions -- August 2005 and July 2006 -- thereby violating SAST (Substantial Acquisition of Shares and Takeovers) regulations.

Further, it was revealed that another 2 lakh shares were purchased by Paksh in September 2007 and Agarwal was its PAC (person acting in concert).

Subsequent to this acquisition, the holding of Paksh and its person acting concert (PAC) Agarwal rose to 16.41 per cent of SGWL.

Agarwal had himself admitted that the purchase and sell orders were placed by him on behalf of Paksh, as per the order.

Hence, upon crossing the 15 per cent barrier it was necessary for Paksh and Agarwal to make an public offer announcement under the SAST rules, the regulator noted.

However, they failed to comply with open offer obligations as required under the SAST rules, Sebi said in its order.

But no disclosures were made to the exchange in the respect of the acquisition, Sebi noted.

Also, Agarwal failed to comply with the provisions of PIT (Prohibition of Insider Trading).

Meanwhile, in another order, the regulator slapped a fine of Rs 10 lakh on Yadunath Singh in a case related to disclosure lapses in the matter of Covidh Technologies Ltd (CTL).

The order came after Sebi had conducted an investigation into the alleged circulation of SMS in the scrip of CTL for the period February 16-21, 2017.

The regulator found that SMS were sent by noticee through other entities. However, the bank statement of noticee had fund transfers with other connected entities and SMS aggregators for manipulation in the scrip.

Further, the investigating authority sent multiple summons and reminders to sought the information regarding the fraudulent trading.

''However, noticee (Yadunath Singh) did not appear for the summons and neither did he submit the information as sought by the investigation authority,'' Sebi Adjudicating Officer Barnali Mukherjee said.

She also noted, through non-submission of the requisite information to the investigating authority and the noticees disregard for the investigation process of Sebi needs to be view seriously.

In a separate order, Sebi levied Rs 4 lakh penalty on two individuals for indulging in manipulation of scrip in the matter of Octane Interactive Technologies Ltd.

In another order, the market regulator disposed of adjudication proceedings against Reliance Capital Ltd (RCL) in a case pertaining to alleged default committed by RCL in the repayment of interest and principal amounts to the various debenture holders.

The order came after Sebi had received communications from Vistra ITCL (India) Ltd for the period December 2019 to January 2020.