The regulator passed two interim orders in the matter of Supreme Tex Mart Ltd (STML) with respect to sending of SMSes in the scrip of STML.
In its first interim order dated February 2017, the regulator barred Gautam Sanjay Khandelwal from accessing the markets for sending SMSes and trading in the scrip of STML.
In the second interim order dated November 2017, the regulator barred 10 entities for sending SMSes in the scrip of STML and for executing trades by other connected entities during July-October 2016.
However, Sebi dropped proceedings against two entities.
After the interim orders, the market watchdog initiated a detailed investigation in the matter.
In its 101-page final order, the regulator found that all the entities were connected to each other and they traded amongst themselves to create volume in the shares of STML.
Also, promoters and directors of STML, namely Ajay Gupta and Gautam Gupta, transferred funds to other connected entities on multiple occasions for sending bulk SMSes to investors, which planted misleading information related to STML shares.
Further, Khandelwal, Radheshyam Lahoti, Goldleaf International, Ajay Gupta, Shikha Gupta, Gautam Gupta, Bhavana Gupta, Santosh Singh, Creative Vision Industries and SINDIA Investment Group Pte manipulated the price of the scrip and then offloaded shares of STML in secondary market when volumes in the shares were increased as a result of SMSes,” Sebi’s whole-time member Ananta Barua said in the order passed on Wednesday.
He also found Lahoti, Ajay, Gautam, STML and Future Fintrade guilty for sending bulk SMSes recommending ‘buy’ for STML to investors.
By offloading shares in the market, entities (except Santosh Singh who lost in the trade) have made illegal gains in violation of the securities laws and they need to disgorge the money, the order said.
All the entities were part of a fraudulent scheme to plant unsolicited and misleading advice recommending purchase of shares of STML with a view to fraudulently induce gullible investors to purchase share of the company and succeeded in offloading large number of shares in the secondary market, it said .
Meanwhile, in another order, the regulator imposed fines totalling Rs 10 lakh on two entities for entering into synchronised trade and creating a false and misleading appearance in the Nifty Options.
The order came after Sebi had conducted an investigation in the matter for the period from November 2013 to June 2014.