Capital markets regulator Sebi on Friday levied a fine of Rs 15 lakh on Roselabs Finance for flouting market norms in the matter of Gujarat Arth Ltd (GAL).
The order came after the Securities Appellate Tribunal (SAT) in its ruling in December 2022 set aside Sebi’s December 2019 order, wherein a penalty of Rs 2.5 crore was imposed on noticee (Roselabs) for violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules and SAST (Substantial Acquisition of Shares and Takeovers) norms. In its order, the Securities and Exchange Board of India (Sebi) found that promoters and persons acting in concert with GAL, including Noticee, had offloaded shares in the market through off-market transfer in and around the time of misleading announcement made by the Gujarat Arth Ltd.
The announcement created artificial volume and impacted the price of the scrip, thus defrauding the investors.
Also, the noticee transferred shares off-market and received back shares, which triggered more than 15 per cent of the paid-up capital of the company before transferring again their entire holding in an off-market transaction, it added.
However, no public announcement was made and the noticee failed to make requisite disclosures in accordance with the market norms.
Consequently, the regulator imposed a fine of Rs 2.5 crore on the noticee.
The tribunal while upholding the violations committed by the noticee remanded the matter back to Sebi to pass a fresh order.
The regulator noted that the violations occurred in the year 2003, since then the management of the noticee has changed twice and the present management of the firm was not involved when the said violations were committed.
However, the regulator also take into account that a considerable time gap has passed after the violations have occurred. Since the contravention of market norms committed by the noticee was established, the order said.
Therefore, the regulator is inclined to take a lenient approach while levying penalties in respect of the violations, the order said.
Accordingly, the market watchdog slapped a fine of Rs 15 lakh on Roselabs Finance.
