Capital markets regulator SEBI has enhanced its vigil on entities engaged in illicit trading and has suggested probe by other agencies to check laundering of black money through stock markets.
SEBI, which found several entities with unauthorised schemes laundering black money to evade taxes, is currently probing many such cases. It has also barred two entities for illicit tax-free gains running into hundreds of crores of rupees.
In the first order, SEBI barred Mishka Finance, its 6 promoters, 4 directors and 170 other entities from accessing securities market and prohibited them from buying, selling or dealing in securities till further directions.
SEBI has suo motu carried an examination after noticing an exorbitant rise in trading volume and share price of Mishka and found the company along with its promoters and directors issued new shares through preferential allotment to certain entities. Further, the promoters transferred their holding in physical form to related entities, while price of the scrip increased astronomically despite low volumes. One month after share split, the preferential allottees and promoter-related entities started selling the shares to entities related to Mishka, thereby making huge profits.
“It appears that the stock market mechanism was used by the company, its promoters and related entities for booking Long-Term Capital Gains for `254 crore approximately and converting their unaccounted income into accounted one. These connected entities are offloading these shares by indulging in trading in an artificial, manipulative and unfair manner.”
Similarly, Sebi restrained Pine Animation Group, its promoters, related entities and directors along with their preferential allottees (total of 178 entities) till further directions.
Sebi said the typical modus operandi of allotting shares on a preferential basis, announcing a stock split and then bringing in connected entities to provide exit was a scheme devised to make ill-gotten gains. It included pumping the share price artificially and then dumping the price so that the same cycle could be repeated.
SEBI, which found several entities with unauthorised schemes laundering black money to evade taxes, is currently probing many such cases. It has also barred two entities for illicit tax-free gains running into hundreds of crores of rupees.
In the first order, SEBI barred Mishka Finance, its 6 promoters, 4 directors and 170 other entities from accessing securities market and prohibited them from buying, selling or dealing in securities till further directions.
SEBI has suo motu carried an examination after noticing an exorbitant rise in trading volume and share price of Mishka and found the company along with its promoters and directors issued new shares through preferential allotment to certain entities. Further, the promoters transferred their holding in physical form to related entities, while price of the scrip increased astronomically despite low volumes. One month after share split, the preferential allottees and promoter-related entities started selling the shares to entities related to Mishka, thereby making huge profits.
“It appears that the stock market mechanism was used by the company, its promoters and related entities for booking Long-Term Capital Gains for `254 crore approximately and converting their unaccounted income into accounted one. These connected entities are offloading these shares by indulging in trading in an artificial, manipulative and unfair manner.”
Similarly, Sebi restrained Pine Animation Group, its promoters, related entities and directors along with their preferential allottees (total of 178 entities) till further directions.
Sebi said the typical modus operandi of allotting shares on a preferential basis, announcing a stock split and then bringing in connected entities to provide exit was a scheme devised to make ill-gotten gains. It included pumping the share price artificially and then dumping the price so that the same cycle could be repeated.
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