Market regulator Sebi today barred Gennex Laboratories Ltd (GLL) and its promoter-chairman, Vinod Baid, from the securities market for a period of three years for alleged manipulative dealings related to the firm.
However, the regulator dropped the allegations against the company's directors -- U C Bhandari, Y Ravinder Reddy and Kishore Jhunjhunwala -- as there was "no material to establish that they were in charge of day-to-day affairs of GLL or that the alleged violations occurred with their consent or connivance".
Sebi's showcause notice had alleged GLL (earlier known as Prudential Pharmaceuticals), its chairman and directors, of making false corporate announcements to create artificial market in the company shares and manipulate the same in a fraudulent manner between 2007-08.
"... hereby restrain Gennex Laboratories and Vinod Baid from accessing the securities market and also prohibit them from buying, selling, and otherwise dealing in securities market, directly or indirectly, in whatsoever manner, for a period of three years from the date of this order," Sebi said in an order today.
The market regulator said GLL had "planted false announcements in order to create an opportunity for Vinod Baid to offload his shares in the market at inflated prices and generate artificial interest in the scrip of GLL".
"Vinod Baid, being the promoter, chairman and executive director of GLL has played an active role in issuance of such false announcements that had potential to influence and induce the buying and selling in its shares by investors," it added.
According to the regulator, Baid was "instrumental" in the issuance of false corporate announcements and fraudulently sold his 9.60 lakh shares in the company through Mercury Fund Management Company, a connected entity of GLL, "taking advantage of the positive impact created in the market by the corporate announcements".
The regulator had conducted a probe into the trading in the shares of GLL from April 30, 2007 to November 18, 2008.
As per the probe, some of the alleged false announcements were related to GLL's investment proposal with Singapore's Innovesco and its 51 per cent stake purchase in Ammana Bio Pharma, among others.