Sebi bans SIL,untraceable chairman

Sebi said show-cause notices were sent to Basantani and other noticees by way of Registered Post,Acknowledgement Due at their last known addresses. However,the same were returned undelivered by the postal department with remarks like left without information/ left-not known/ office always closed. Thereafter,attempts had been made to serve the show-cause notice SCN through courier also. Since,the noticees were not found at their last known address,the said SCN was hosted on the Sebi website under the head Unserved Summons/Notices so as to enable the noticees to submit their reply. Adequate steps have been taken by SEBI to serve the SCN to the noticees,who are not traceable at their last known addresses, Sebi said in an order.

During the period between December 03,2003 and February 20,2004 Basantani indulged in malpractices and artificially influenced the share price of the company and made unnatural profits by announcing a bonus issue. Sebi found that SIL had issued misleading announcements regarding bonus issue when its financial position was not sound with an objective to create investor interest in the scrip of SIL.

In an investigation in the scrip of SIL by SEBI,it was noticed that the scrip opened at Rs 11.4 on December 3,2003 touched a high of Rs 20.70 on December 09,2003 and closed at Rs 4.1 on February 20,2004 accounting for a fall of around 64 per cent over 55 trading days with significant increase in the traded volumes. Sebi has observed that the movement in the scrip increased with the announcement of bonus issue. However,as per the investigation report,Sebi found that the bonus shares were never dispatched to the shareholders. Sebi has found that announcement of issue of bonus shares was false and misleading and the only reason for the announcement regarding the bonus issue appears to be creation of investor interest in the scrip of SIL and thereby creating liquidity to allow the off-loading of SIL shares by the promoter.

On the pretext of bonus issue the related entities of SIL and Raj Kumar Basantani had off-loaded their holdings to the detriment of genuine investors. During the period of December 2003 to March 2004,related entities of Basantani and SIL had offloaded about 104 lakh shares of SIL trading through the member broker Raj Kumar Basantani on NSE, Sebi has observed.

The market regulator has,therefore,banned Basantani along with Vishnu Basan,Ramesh Verma,Babu Basan,Manorama Trading Ltd,Million Investrade Ltd,Mastermind Mercantile Co-op Ltd,Panna Agro Fin Pvt Ltd,Jasrani Equfin Pvt Ltd,Kalbadevi Fin Pvt Ltd,Patwa Agrimpex Pvt Ltd,Aravali Hsg amp; Fin Pvt Ltd,Structure Housing amp; Finance Private Ltd,Jugnu Securities Pvt Ltd from buying,selling or dealing in securities and from associating in securities market in any manner whatsoever for a period of 1 year from the date of this order.

During the course of investigation,Sebi received a copy of investigation report from Serious Frauds Investigation Office,Ministry of Company Affairs,detailing the affairs of SIL with regard to the manipulation of its share prices through circular trading and misuse of funds lent by banks and financial institutions,Sebi said.