Platinum Corporation Case: SEBI slaps Rs 20 lakh penalty on 2 persons

Market regulator Sebi has imposed a fine of Rs 2000000 on two individuals for their involvement in fraudulent trade practices while dealing in shares of Platinum Corporation. The regulator had conducted an investigation into irregularities in trading in the company's shares during 2007 and 2008 and into the possible violation of the provisions of the Sebi Act, 1992. The investigation was focused on change in promoter's shareholding and how it got reduced from 11.63% to zero during the quarter December 2007. It was found that the trading details at BSE did not reflect any sale of shares by the promoters and the details available with the depositories did not contain any off-market debit transactions executed by the promoters. Investigation unearthed massive fraudulent scheme spread across two years, wherein more than 70 persons connected to the promoters and directors of the company "conspired with one another along with the company, pooled shares from various demat accounts and sold more than 90% of equity capital for a consideration of over Rs 200000000." A total of 30 persons, including the two noticees against whom orders were passed, were found to have transferred shares to persons who sold shares in the market and acted as conduit. According to Sebi, they "thereby, facilitated, aided and abetted the promoters and/or persons connected to the promoters/directors and their commissions and omissions are also part of the conspiracy in fraudulent dumping of shares of Platinum Corporation in the market". The regulator had issued show cause notices to them last year. After going through the submission, Sebi said that the replies received from them were not satisfactory and the noticees had failed to explain their transactions. "The Noticee has transferred shares of the company to Tushar Shah who is the promoter of the company and it is only because of the numerous entities including the Noticee, that such huge number of shares of the company have been offloaded in the market at the cost of gullible investors," Sebi said in one of the orders. The regulator had in January imposed a penalty totalling Rs 2400000 on 17 entities, including Platinum Corporation Director Pratik Shah, on charges ranging from non-disclosure of acquisition of shares to involvement in fraudulent trade practices in dealing with shares of the company. Earlier this month, Sebi imposed penalties of Rs 1000000 each on 14 others in the same case.