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Sebi bans 102 entities from markets for fraudulent trading in Sulabh Engineers

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NEW DELHI: Regulator Sebi has barred as many as 102 entities from the capital markets for up to seven years for indulging in fraudulent and manipulative trading in the shares of Sulabh Engineers and Services Ltd. The ban imposed by Sebi varies from one year to seven years, according to the regulator’s order.

Sebi found that Sulabh Engineers and Services Ltd (SSEL) was a listed company with low share capital and whose shares were almost never traded. Then new promoters –Manoj Kumar Agarwal and Deepa Mittal — came in and acquired 60 per cent stake through share purchase agreement and open offer in 2011.

Further, through their “connected” entities, they cornered a significant number of outstanding shares so as to control the supply of the shares in the market, Sebi noted.

Then, the company went for preferential allotment. Subsequently, connected entities used to release minuscule or minimum lot of shares at frequent interval at prices far away from the last trading price to increase the share price.

Further, the “connected entities” by trading among themselves tried to show considerable activity.

In its 145-page order on Monday, Sebi said the company and the price manipulators connected to the company along with other connected noticees controlled the supply of the shares and manipulated the price of the scrip. Connected noticees also sold substantial shares at the inflated price and made substantial gain at the expense of general investors, it added.

By indulging in such acts, these 102 entities created false and misleading appearance of trading in the securities market and thus violated the provisions of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms, it added.

Accordingly, the regulator has barred these 102 entities from the capital markets for a period ranging from one year to seven years.

It has restrained Agarwal and Mittal from the capital markets for seven years. In addition, they have been prohibited from being associated with any listed company or a Sebi-registered intermediary, in any capacity including as a director and key managerial person, for a period of seven years.

Also, the regulator has disposed of proceedings against 47 other entities in the matter.

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