Sebi bars 129 entities; suspects money laundering, tax evasion

MUMBAI: In a fresh crackdown on suspected tax evasion and laundering of black money through stock markets, regulator Sebi today barred Mishka Finance and TradingBSE -1.93 % Ltd and 128 other entities from the securities market.

While the total amount involved could not be ascertained, these entities are estimated to have shown fictitious capital gains to the tune of Rs 254 crore and just 29 of them made unlawful gains to the tune of Rs 92 crore on an investment of just Rs 2 crore.

Sebi has also referred the case to other enforcement agencies, including Income Tax Department, Enforcement Directorate and Financial Intelligence Unit, to probe suspected money laundering or tax evasion by these entities and take necessary action.

So far, Sebi has suspended trading in nearly 30 listed companies for such violations while action has been taken against more than 500 entities, including promoters and others, for tax evasion of over Rs 3,000 crore.

For violations related to capital markets, Sebi in its order today restrained 129 entities from accessing the securities market and from buying, selling or dealing in securities, either directly or indirectly, with immediate effect till further directions.

The entities include promoters and top executives of various listed companies as well, including Bhushan Steel, some of whom have been involved in similar cases where Sebi has already passed orders.

The regulator has also asked stock exchanges and depositories to ensure that all its directions are strictly enforced.

Besides, trading in the securities of Mishka would be suspended till further direction.

Among the barred entities include Mishka, its promoter and promoter related entities and its directors. These entities have misused the stock exchange system to generate fictitious long-term capital gains tax.

Sebi noted that Mishka was found actively involved in the whole design to misuse stock exchange mechanism to generate bogus LTCG.

Apart from being a possible case of money laundering or tax evasion which could be seen by the concerned law enforcement agencies separately, Sebi said that it is “prima facie also a fraud in the securities market in as much as it involves manipulative transactions in securities and misuse of the securities market.”

“The manipulation in the traded volume and price of the scrip by a group of connected entities has the potential to induce gullible and genuine investors to trade in the scrip and harm them,” it added.

This order would come into force with immediate effect.