Sebi bans Mehul Choksi from market for 10 years
MUMBAI: Markets regulator Sebi has banned fugitive businessman Mehul Choksi, former promoter & chairman of Gitanjali Gems, from trading in the markets for 10 years for using front entities to trade in the shares of the company to maintain its price from falling. Choksi has also been fined Rs 5 crore for the same Sebi rule violations that restricts promoters of a company from trading in the shares or derivatives contracts of the same company.
Choksi had defrauded Punjab National Bank and in January 2018 fled the country. Currently he’s been proclaimed an offender by the government and several cases against him, by agencies like CBI, Enforcement Directorate and the Income Tax department, are pending.
Sebi’s investigations showed that between July 18, 2011 and January 25, 2012, while the sensex slid a little over 8%, the stock price of Gitanjali Gems had slid just about 2.5%. During this period Choksi had used several entities, companies and individuals that acted as his front, to trade in the stock of Gitanjali Gems to maintain its price.
Since as a promoter of the company Choksi himself was not allowed to trade in the stock and derivatives contracts of the company, he used these entities as his front and layered fund transfers through several bank accounts which were being operated by his front entities. Analysis of bank account statements showed the flow of funds from companies controlled by Choksi to his front entities and their trading activities, Sebi order noted.
Choksi, reportedly residing in Antigua and Barbuda, didn’t reply to Sebi’s show cause notice relating to these illegal trades.
Earlier, through an interim order of January 31, 2022, Sebi had banned Choksi for a year. The current order enhanced the period of the ban and put in a monetary penalty.
Choksi had defrauded Punjab National Bank and in January 2018 fled the country. Currently he’s been proclaimed an offender by the government and several cases against him, by agencies like CBI, Enforcement Directorate and the Income Tax department, are pending.
Sebi’s investigations showed that between July 18, 2011 and January 25, 2012, while the sensex slid a little over 8%, the stock price of Gitanjali Gems had slid just about 2.5%. During this period Choksi had used several entities, companies and individuals that acted as his front, to trade in the stock of Gitanjali Gems to maintain its price.
Since as a promoter of the company Choksi himself was not allowed to trade in the stock and derivatives contracts of the company, he used these entities as his front and layered fund transfers through several bank accounts which were being operated by his front entities. Analysis of bank account statements showed the flow of funds from companies controlled by Choksi to his front entities and their trading activities, Sebi order noted.
Choksi, reportedly residing in Antigua and Barbuda, didn’t reply to Sebi’s show cause notice relating to these illegal trades.
Earlier, through an interim order of January 31, 2022, Sebi had banned Choksi for a year. The current order enhanced the period of the ban and put in a monetary penalty.
