MUMBAI: Market Regulatory Authority Sebi banned businessmen from running away Mehul Choksiformer promoter and president of Gitanjali Gemstonefrom trading on the market for 10 years because of using front-end entities to trade the company’s stock in order to keep its price unchanged. Choksi was also fined Rs 5 crore for the same violation of the Sebi rule that restricts promoters of a company from trading shares or derivatives contracts of the same company.
Choksi cheated Punjab National Bank and in January 2018 fled the country. He has now been declared a violator by the government and several cases against him, by agencies like CBI, Executive Board and the Income Tax department, pending.
Sebi surveys show that from July 18, 2011 to January 25, 2012, while sensex slipped a little more than 8%, the share price of Gitanjali Gems fell only about 2.5%. During this period Choksi used a number of organizations, companies and individuals as his front, to trade shares of Gitanjali Gems in order to maintain its price.
Since, as a promoter of the company, Choksi himself was not authorized to trade the company’s shares and derivatives contracts, he used these entities as a front and multi-layered remittance through through several bank accounts operated by his front units. Analysis of bank account statements shows cash flows from companies controlled by Choksi to his affiliated units and their trading activities, Sebi order noted.
Choksi, believed to be based in Antigua and Barbuda, did not respond to a notice of Sebi’s program cause related to these illegal transactions.
Previously, through a temporary order on January 31, 2022, Sebi banned Choksi for a year. The current order has increased the length of the ban and introduced a monetary penalty.
Choksi cheated Punjab National Bank and in January 2018 fled the country. He has now been declared a violator by the government and several cases against him, by agencies like CBI, Executive Board and the Income Tax department, pending.
Sebi surveys show that from July 18, 2011 to January 25, 2012, while sensex slipped a little more than 8%, the share price of Gitanjali Gems fell only about 2.5%. During this period Choksi used a number of organizations, companies and individuals as his front, to trade shares of Gitanjali Gems in order to maintain its price.
Since, as a promoter of the company, Choksi himself was not authorized to trade the company’s shares and derivatives contracts, he used these entities as a front and multi-layered remittance through through several bank accounts operated by his front units. Analysis of bank account statements shows cash flows from companies controlled by Choksi to his affiliated units and their trading activities, Sebi order noted.
Choksi, believed to be based in Antigua and Barbuda, did not respond to a notice of Sebi’s program cause related to these illegal transactions.
Previously, through a temporary order on January 31, 2022, Sebi banned Choksi for a year. The current order has increased the length of the ban and introduced a monetary penalty.
