New Delhi, March 18 Sebi has imposed penalties totaling Rs 2.8 crore on 18 entities, as well as barred them from the securities markets for up to five years for manipulating the share prices of Retro Green Revolution Ltd (RGRL).
In addition, the regulator has directed 15 of these entities to disgorge the total unlawful gains worth Rs 2.94 crore, along with 12 percent interest per annum from December 31, 2021, until the date of payment.
The amount is to be deposited in Sebi's Investor Protection and Education Fund within 45 days.
In its 61-page order passed on Tuesday, the regulator found that the entities were part of a premeditated scheme to artificially inflate the price of an illiquid scrip of RGRL and lure unsuspecting investors.
Sebi observed that the scheme involved trading among related entities to create artificial volume in a thinly traded stock, followed by circulating tips/stock recommendations through a Telegram channel.
The 1st to 6th noticees, including Sanjay Arunkumar Choksi, had indulged in creating a misleading appearance of trading in the scrip, as well as manipulating the price of the scrip, the Securities and Exchange Board of India (Sebi) said in the order.
The market regulator noted that the Choksi Group, led by Sanjay Choksi, played a key role in the manipulation. Although Choksi was no longer the promoter of RGRL, the company continued to be controlled by him as all the statutory payments were being received from his account.
"I find that noticee no 1 (Choksi) did not act in good faith and exploited his influence in the company for personal gains," Sebi's Quasi-Judicial Authority Santosh Shukla said in the order.
"The increase in volume of shares in the otherwise illiquid scrip of RGRL, and the Telegram recommendation, are indicators affecting the investment decision that sway investors in trading in the scrip," Sebi's Quasi-Judicial Authority Santosh Shukla said in the order.
Shukla further stated that this case is suitable for issuing directions restraining the noticees (18 entities) from the securities market and imposing a monetary penalty on them to achieve justice.
The entities enabled certain noticees to offload illiquid shares of RGRL to general public investors and thereby earning unlawful gains of a little over Rs 2.94 crore, as per the order.
Accordingly, Sebi found that these 18 entities violated market norms and penalized them in the range of Rs 5-50 lakh.
The order came after Sebi conducted an investigation into the trading activities in the scrip of RGRL, in which allegedly stock recommendations/tips were circulated through a Telegram channel.
The investigation was conducted from September 1, 2020, until December 31, 2021, to ascertain whether there were violations of the provisions of Sebi's PFUTP (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) rules.
Thereafter, Sebi issued a show cause notice on November 8, 2024, against the noticees for the alleged violations.