Unitech's Former Promoters Cleared Of Stock Manipulation Charges By SEBI

Capital market regulator SEBI has disposed of allegations against the former promoter of Unitech in the case of alleged routing of funds through overseas bank accounts to manipulate the company's stock price.

Securities and Exchange Board of India, after an investigation, has dismissed the proceedings initiated against Sanjay Chandra and Ajay Chandra, according to an order released on Friday. The brothers were under investigation by the Economic Offences Wing for breach of trust and money laundering.

The market regulator had conducted a suo-moto investigation between April 1, 2006 and March 31, 2008 to ascertain whether the former promoters of the realty firm had transferred the funds from Unitech to Unitech Overseas and then moved them to its other foreign subsidiaries using UBS accounts.

Further, according to the allegations, these funds were routed from the UBS account to a Mauritius-based company, Pluri Emerging Companies, that were then used to purchase Unitech shares. The share purchase was done directly or indirectly through funds like Sophia Growth Fund and Deutsch Bank Mauritius.

According to the order, the investment in the Mauritius-based company was done before the transfer of $8 million from Unitech to Unitech Overseas. It further said that there was no evidence on record to prove the fund transactions from Unitech or its other subsidiaries to United Corporate Parks, as stated in the show cause notice issued on May 3, 2023.

"... I do not find sufficient corroborative evidence, either in the investigation report or in the material made available along with the IR," SEBI Chief General Manager G Ramar said in the report.

The 25-page order will come into force with immediate effect. In January 2020, Unitech's board was superseded by the central government on the Supreme Court's direction. Both the brothers were serving as managing directors of the company before the board was superseded.