V Marc India Stock Manipulation: SEBI Bans 12 Including Promoter, Directors; Impounds Rs6.38 Crore Illegal Gains
Moneylife Digital Team 29 February 2024
Market regulator Securities and Exchange Board of India (SEBI) has barred 12 entities, including the promoter of V Marc India Ltd, from the securities market for engaging in a fraudulent scheme to manipulate the volumes and price of the company's shares since its listing. Additionally, SEBI ordered impounding wrongful gains of Rs6.38 crore made by some entities from the manipulative scheme.
In an interim order, Ananth Narayan G, whole-time member (WTM) of SEBI, says, "When promoters such as Vikas Garg themselves indulge in cynical and egregious manipulation as has been observed in this case, not only are they duping the specific public investors who were lured to invest in their Company, they are also striking at the core trust of investors in the securities market ecosystem...On account of the scheme to manipulate the market right from the time the scrip was listed, the entire initial public offering (IPO) of V Marc itself has come under a cloud of suspicion warranting further investigation."  
"It is amply clear that Mr Garg, promoter and managing director (MD), Sandeep Srivastav, former whole-time director and market operator Prijesh Kurani, inter alia, devised and orchestrated a scheme for price-volume (PV) manipulation along with the other named PV manipulators. There is strong direct evidence in this regard inter alia the documented signed agreement to manipulate the price, the tell-tale fingerprints of the trading patterns and the latest trading price (LTP) indicators of the PV manipulators, and the arrangement of funds and trading accounts by the Company management for the manipulation. Furthermore, there is reason to believe that the nefarious designs of the Company management are still likely at play, at significant cost to unsuspecting investors and to the trust in the SME ecosystem as a whole. Given the above, there is a compelling case warranting interim directions debarring the Company management and PV Manipulators across the securities market," the order says.
According to SEBI, the beneficiary position statement details as of 31 December 2023 reveals that the number of public shareholders in V Marc India have increased by 125.41% to 1,526 public shareholders from 677 public shareholders since the listing of the company on 9 April 2021.  
As noted earlier in this order, The SEBI WTM says, "the entities named in this Order have either already exited their positions or are in the process of doing so, by offloading the shares held by them on retail investors oblivious of the manipulative scheme being carried out by them. As on date, six of the connected entities i.e. Sudhir Gupta, Pratik Madhukar Sheth, Jinal Pratik Sheth, Surbhi Aggarwal, Dharini Kurani and Rekha Kurani have completely sold their holdings in the Company. One connected entity, Madhukar Sheth with whom shares of the Company were privately placed and whose family members were major subscribers to the IPO, continues to hold around 0.90% of the shares in the Company though he has already sold 6,79,000 shares since the Company's listing."
"While examining this matter initially, there was a view that since the matter may need further investigation to unearth additional details in the context of the IPO, interim orders may not be warranted. However, the significant number of shares sold at elevated prices during the latter half of the year 2023 clearly indicated that the conspiracy recorded was in fact being placed into action at an expedited pace. The certainty of this conspiracy and its continuing impact is no longer in doubt, thereby warranting interim orders," Mr Ananth Narayan says.
SEBI received a complaint on 21 September 2022 from one of the shareholders of V Marc India alleging price manipulation of the Company's scrip. 
V Marc had launched an IPO (100% book built) with an issue size of 60 lakh equity shares of face value of Rs10 each at an issue price of Rs39 each, aggregating Rs23.40 crore. The issue opened on 25 March 2021 and closed on 31 March 2021. The scrip was listed for trading on the small and medium enterprise (SME) segment of the National Stock Exchange (NSE) from 9 April 2021.
The examination, covering the period from 9 April 2021 to 30 April 2021, was facilitated by data obtained from the mobile device of Mr Kurani, seized under the search and seizure operation conducted by SEBI at his residence in May 2022, as part of the investigation into the matter of front running of trades of Axis Mutual Fund. The data from the device, particularly WhatsApp messages involving entities referenced in this Order, including a copy of a signed agreement between certain entities, has proven to be crucial evidence in this case.
SEBI's investigation revealed that the alleged fraudulent scheme had a profound impact, as evidenced by the surge in volumes and price hikes, prompting most entities, including the PV manipulators and IPO subscribers, to exit entirely. Consequently, the shares offloaded were absorbed by public shareholders, resulting in a notable increase in their numbers.
SEBI also mentioned that a few entities connected or known directly or indirectly to Mr Garg, promoter of V Marc, namely Sudhir Gupta, Pratik Madhukar Sheth, Jinal Pratik Sheth and Dharini Kurani, had subscribed to the IPO. These entities were allotted a total of 18.42 lakh shares out of the 60 lakh shares allotted during the IPO, constituting 30.70% of the shares allotted during the IPO.
Further the total amount of money transferred by the management of the company via their connected entities to Mr Kurani and his connected entities was Rs4.04 crore, their net purchases is Rs4.14 crore.
During the examination period, SEBI found that the trades executed by PV manipulators, namely, Mr Kurani, Dharini Kurani, Surbhi Aggarwal, Vinod Vilas Sable, Jai Kishorr Singhal, Seema Garg and Madhu Srivastava,  had contributed to 85.86% of the gross market purchase of the scrip and 92.40% of the market-wide net purchase. Further, it was also observed that PV manipulators were prima facie contributing significantly to the LTP, the price at which the latest trade took place.
Further SEBI mentioned that PV manipulators created artificial volume in the scrip by trading 3.03 lakh shares among themselves thereby contributing 17.63% to the market volume . By executing 22 trades among themselves, the PV manipulators pushed up the price by contributing Rs40.60 to the market positive LTP, i.e., 35.41% of the gross market positive LTP during the examination period.
SEBI  has, therefore, restrained 12 entities from buying, selling or dealing in the securities market or associating themselves with the securities market, either directly or indirectly, in any manner whatsoever until further orders. 
Apart from Mr Garg, Mr Srivastava and Mr Kurani, the other entities barred by SEBI are Sudhir Gupta, Dharini Kurani, Rekha Kurani, Surbhi Aggarwal, Vinod Vilas Sable, Seema Garg, Madhu Srivastava, Jai Kishorr Singhal and Seema Agarwal.
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