Sebi has banned fugitive businessman Mehul Choksi and a Rakesh Girdharlal Gajera from capital markets for a year and fined them a total of Rs 2.5 lakh crore for breaching insider trading rules over the Gitanjali Gems issue.

In addition, they were prohibited from buying, selling or otherwise dealing in Gitanjali Gems Ltd (GGL) securities for two years.

In addition, the Securities and Exchange Board of India (Sebi) has directed Gajera to hand over Rs 15.82 crore.

Gitanjali Gems founder and managing director Choksi is Nirav Modi’s uncle, and both face charges of defrauding state-run Punjab National Bank (PNB) of more than Rs 14,000 crore.

Both Choksi and Modi fled India after the PNB scam came to light in early 2018. Choksey is said to be in Antigua, but Modi is being held in a British prison and has challenged India’s extradition request.

In its order, Sebi said Choksi communicated unpublished price-sensitive information (UPSI) to Gajera, which sold its entire 5.75% stake in GGL in December 2017 in order to avoid losses before disclosing the fraudulent issuance of LoU (Letter) undertaken by Gitanjali Group.

It was pointed out that fraudulent LoUs were issued on behalf of Gitanjali Group entities, including GGL.

“Notice No. 1 (Choksi) communicated UPSI (Unpublished Price Sensitive Information) to Notice No. 2 (Gajera) without any potential legal obligation or any legitimate purpose,” Sebi said in its 60-page final order Say.

Through such activities, they are violating the provisions of the PIT (Prohibition of Insider Trading) rules.

In addition, Sebi noted that Gajera violated GGL by holding more than 5% of GGL’s total share capital in the quarter ended September 2017 and failing to disclose to the exchange in December 2017 a change in its stake in GGL of more than 2% SAST (Material Share Acquisition and Takeover) regulations.

As a result, Sebi has restricted the pair from “accessing the securities market and further prohibits the direct or indirect purchase, sale or otherwise dealing in securities, or in any way associated with the securities market, for a period of 1 year.”

In addition, the regulator fined Choksi Rs 1.5 crore and Gajera Rs 1 crore. They have been instructed to pay the fine within 45 days.

The regulator launched an investigation into alleged insider trading activities by certain entities in GGL shares between May 2017 and February 2018 to determine whether the alleged entities violated PIT’s UPSI-based stock trading practices.

In February 2020, the regulator fined Choksi, Gitanjali Gems and another individual Rs 5 crore for violating various regulations related to the massive fraud at PNB, including listing norms.

Complete News Source : Business Standard