The Securities and Exchange Board of India has passed an order barring 246 entities from accessing the securities market for alleged market manipulation and misusing the stock exchange mechanism to generate bogus long-term capital gains.
The Sebi order followed a regulatory probe in the unusual price movement in the shares of Kailash Auto Finance Ltd between November 2014 and December 2015. The period saw the shares falling from Rs 28.05 to Rs 2.01. Earlier, between January and June 2013, the stock price increased from Rs 11 to Rs 36.25 in just 36 trading sessions.
Along with the listed entity, Kailash Auto Finance and its promoters, the capital market regulator has banned all the other entities that, according to the probe, were beneficiary of the alleged market manipulation activity.
The order issued on Tuesday said, “During preliminary examination several acts and omissions, in connection with dealing in shares of Kailash Auto having a bearing on the securities market, including layering of funds, circulation of funds and securities, amongst inter-connected parties for acquisition and divestment of securities of connected unlisted private companies and corporate actions including capital reduction, issuance of bonus shares, private placement and merger of such companies with Kailash Auto were also observed,” said the order issued on Tuesday.
Further, the connected parties have grossly misused the stock exchange system to generate bogus LTCG to aid and help beneficiaries to convert their unaccounted income into N accounted one with no payment of taxes as long-term capital gains (LTCG) is tax exempt.
According to the SEBI probe, the connected entities acted in concert under a premeditated plan to acquire dominant market power for the shares of Kailash Auto and their “acts conduct, behaviour and dealings connote a deceptive conduct designed to deceive or defraud investors by controlling or artificially affecting” the share price.
Order after probe into unusual price movement in the shares of Kailash Auto Finance Ltd
