SEBI Bans Mehul Choksi from Securities Market for 10 Years
Moneylife Digital Team 01 November 2022
Markets regulator Securities and Exchange Board of India (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. Mr Choksi has also been fined Rs5 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. Mr Choksi had defrauded 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 (central bureau of investigation), enforcement directorate (ED) and the income-tax (I-T) department, are pending. SEBI’s investigations showed that between 18 July 2011 and 25 January 2012, while the Sensex slid a little over 8%, the stock price of Gitanjali Gems had slid just about 2.5%. During this period, Mr 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 Mr 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.
 
Mr Choksi, reportedly residing in Antigua and Barbuda, didn’t reply to SEBI’s show-cause notice (SCN) relating to these illegal trades. Earlier, through an interim order of 31 January 2022, SEBI had banned Mr Choksi for a year. The current order has enhanced the period of the ban and also imposed a monetary penalty.
Comments
david.rasquinha
3 months ago
Such amazing speed from SEBI! How much more pathetic can SEBI get?
krishan2k5
3 months ago
Congrats SEBI for such a quick action. It has taken them 4 years to wake up and ban Choksi for 10 years. When and if he returns, he shall be allowed to take part in market within 24 hours.
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