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This is an archive article published on November 24, 2005

DSQ probe: Sebi official slaps Rs 1 cr fine on Parekh firm

The Securities and Exchange Board of India (Sebi) appointed adjudicating officer (AO) has imposed a fine of Rs 1 crore on Luminant Investmen...

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The Securities and Exchange Board of India (Sebi) appointed adjudicating officer (AO) has imposed a fine of Rs 1 crore on Luminant Investment Pvt Ltd (LIL), a firm owned by Ketan Parekh, for not providing relevant information to the regulator in November 2004. This is one of the biggest penalties imposed by Sebi under the adjudication process following the enhancement of regulators’ power to impose stringent penalties in 2002.

Sebi was investigating the price manipulation of DSQ Biotech occurred during 2000-01. LIL has traded in the DSQ Biotech stock and in that connection Sebi had sought some information from LIL, which it could not produce.

Amit Pradhan, the Sebi-appointed AO, in his order said, “I am fully satisfied that this case deserves a severe penalty since it’s a matter of multi crore fraud amounting to Rs 220 crore. Specifically, LIL held 10.60 lakh shares of DSQ, whose ‘value at fraud’ works out to Rs 29 crore; these shares were sold in the market at a value of Rs 16 crore.”

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“LIL did not disclose the source of availability of these 10.6 lakh shares when this information was sought from LIL by issuing summons. In other words, it can be said that there is an undue enrichment equivalent to the said amount to LIL,” he said.

He said 348 days have elapsed since the violation occurred and the violation continues till date.

Sebi is empowered to impose penalty of Rs 1 lakh per day of the violation or Rs 1 crore, whichever is the less, in such cases.

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