Sebi slaps Rs 10L penalty on Agarwal family for Empower Industries fraud trade

Dec 11 2012, 16:18 IST
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SummaryThey allegedly fraudulently traded in shares of Empower Industries India Ltd.

Market regulator Sebi today slapped a penalty of Rs 10 lakh on five members of Agarwal family for their alleged role in fraudulent trading in shares of Empower Industries India Ltd.

In its order, Sebi said a penalty of Rs 10 lakh has been imposed on members of Agarwal family -- Rajendra Agarwal, Lata Agarwal, Indra Agarwal, Shambhu Agarwal and Vasudev Agarwal.

The fine would be jointly paid by them, it added.

The regulator said that the penalty is "commensurate with the default committed by them".

The matter relates to a probe conducted by Sebi in the shares of Empower Industries India Ltd (EIL) during February 16 - March 11, 2005.

Sebi found that Devang Master, promoter and director of EIL, transferred 2.13 lakh shares representing 42.60 per cent stake by off market transfers to various entities including the members of the "Agarwal family".

The regulator alleged that the entities then sold a large number of shares through broker Ruchiraj Shares and Stock Broker (RSSB) during the probe period.

" is observed that the broker RSSB had highest concentration on sale side contributing to 49.15 per cent of the total volume during the period, " Sebi said.

"The major selling clients of RSSB were the Agarwal family," it added.

Sebi in its order observed that the evidence may point towards the conclusion that Agarwal family intentionally aided or abetted Master in the circular movement of shares and creation of artificial trading volumes.

" appears that the Agarwal family was aware of the circular movement of shares, as alleged in the Show Cause Notice, and has been party to the whole scheme," Sebi said.

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