Mumbai Market regulator Sebi has imposed penalties totalling Rs 40 lakh on four individuals for their involvement in fraudulent trade practices while dealing in shares of Platinum Corporation Ltd. In separate orders, the Securities and Exchange Board of India (Sebi) directed Vasudev Ambaram Patel, Suresh H Patel, Subhadraben Ramalal Patel and Suketu Ramanlal Patel to pay Rs 10 lakh each as penalty for their role in the stock market fraud.

The latest order comes a day after Sebi imposed similar penalties on 10 others in the same case.

The regulator 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 the change in the promoter’s shareholding and how it got reduced from 11.63 per cent to zero during the quarter ended December, 2007.

It was found that the trading details on the 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 a massive fraud scheme over two years, wherein more than 70 persons connected to the promoters and directors of the company “conspired with each other, along with the company, pooled shares from various demat accounts and sold more than 90 per cent of the equity capital for a consideration of over Rs 20 crore”.

A total of 30 persons, including the 10 noticees against whom orders were passed, were found to have transferred shares to persons who sold shares in the market and acted as a 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 the four individuals last year. After going through their submissions, Sebi said the replies were not satisfactory and the noticees failed to explain their transactions.

“The noticee has transferred shares of the company to the entities as stated above and it is only because of the numerous entities, including the noticee, that such a 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.

Last month, the regulator had imposed a penalty totalling Rs 24 lakh on 17 entities, including Platinum Corporation Promoter and 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.

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