Capital markets regulator SEBI has barred Greencrest Financial Services, two of its executive directors and 15 others from capital markets for three years for fraudulent trading. During the period of restraint, the existing holding of securities, including the units of mutual funds, will remain under freeze, the regulator said in an order on Friday.
Besides Greencrest Financial Services Ltd, Prem Lata Nahar, Shyam Kanheyalal Vyas, Raj Kumar Sharma, Sarita Pradip Bissa, Puspal Chandra, Ravishankar Mishra, Mina Chandra, Sanjoy Kumar Chandra, Pushpa Asoolal Bissa, Dilip Kumar Mandal, Priti Kothari, Sunil Parakh, Aditya Parakh, Gulistan Vanijya Pvt Ltd, PS IT Infrastructure Services Ltd, JMD Sounds Ltd and Ravindra Kumar Grover have been restrained from the capital market.
SEBI had conducted an investigation into the trading in the scrip of Greencrest Financial Services from March, 2012 to July 2015.
The trading pattern adopted by the entities together clearly demonstrates their ill-intentioned design to inflate the price of the scrip through artificial and manipulative trades, SEBI said.
It was further revealed that the buyer entities kept placing orders in larger quantities in the early hours of market and the seller entities matched the price offered by buyer entitled around the closing of the market, but released their shares in smaller quantities for executing their trades thereby extending an active helping hand to the buyers to contribute to the last trading price (LTP) of the price of the scrip with each of their trades.
It further noted that these buy orders were placed knowing well that there is no volume in the scrip and there was no noteworthy positive information available in the public domain in favour of the financial affairs of the company which could have inspired them to buy the shares of the company in large quantities at any cost.
In fact, the buyer entities had received funds from entities connected to the company.
SEBI noted that Sunil Parakh and Aditya Parakh were executive directors of Greencrest Financial Services and therefore, were undoubtedly at the helm of the affairs of the company during the relevant period.
The company being a legal entity cannot function on its own and can act only as a result of the control exercised over it by the directors appointed on its board.
Both of them, being directors of the company, did not make any submission to demonstrate to the contrary or to suggest that the acts attributed to the company were without their involvement, consent or indulgence.
Also, they were part of the pre-mediated scheme or artifice along with the company whose affairs they managed at the relevant point in time that was skilfully executed through other entities in the trading of the scrip of Greencrest during the investigation period.
By indulging in such activities, the entities have violated the provisions of PFUTP (Prohibition of fraudulent and unfair trade practices) Regulations, SEBI said.