Sebi slaps over Rs 21 cr fine on Gujarat Arth promoters, PACs

Mumbai

Sebi has slapped a hefty penalty of over Rs 21 crore on Gujarat Arth Ltd’s promoters and persons acting in concert (PACs) for fraudulent activities in the capital market as well as violation of takeover norms.

The capital market regulator found that the eight entities comprising Gujarat Arth’s promoters and PACs had issued misleading corporate announcements in 2003 and 2004.

Further, the entities were found involved in selling Gujarat Arth’s shares in the market “in and around the time of misleading announcement which created artificial volume and impacted the price of the scrip thus defrauding investors”.?

The entities had also failed to make public announcement and relevant disclosures regarding the share transactions.

In a ruling today, Sebi imposed a penalty of Rs 2.61 crore on Shiv Kumar Agarwal as well as Rs 2.53 crore each on Roselabs Finance, Madhudevi Agarwal and Rosydevi Agarwal.

Besides, a penalty of Rs 2.66 crore each has been levied on Singhal Overseas (now known as Roselabs Ltd) and Sadiram Industries. Singhal Overseas is now named as Roselabs Ltd and later Sadiram Industries was merged into Roselabs.

The regulator has also imposed a penalty of Rs 2.68 crore on Pawankumar Agarwal and Rs 2.77 crore on Roselabs Ltd.

According to Sebi, the entities were “instrumental in issuing misleading corporate announcements” which were related to acquisition of business of Poonam Industries and preferential/right issue, “which did not materialize and which lured investors, leading to creation of artificial volumes”.

It also noted that the entities “transferred shares in off-market and received back shares which triggered more than 15 per cent of the paid up capital of the company before transferring again their entire holding in off market transaction”.

“But no public announcement was made as per the provision of Sebi Takeover Regulations,” the regulator added.

Sebi had conducted an investigation into the alleged irregularity in the trading in the shares of Gujarat Arth for the period from October 6, 2003 to January 28, 2004.

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