SEBI Upholds Order Against 12 Entities In V Marc India Fraud Case

The Securities and Exchange Board of India upheld its earlier order with modifications against 12 entities, including the promoter of V Marc India Ltd., for their involvement in a fraudulent scheme to manipulate the company’s share volume and prices.

The 121-page confirmatory order enforces restrictions on these entities from participating in the securities market.

SEBI’s Whole-Time Member Ananth Narayan G said that the total liability for alleged illegal gains has been adjusted to Rs 6.30 crore, following the deposit of the contested gains by Jai Kishorr Singhal.

The watchdog also noted observations made in the present order are tentative in nature and pending further investigation. The probe will be carried out without being influenced by any of the directions passed or any observation made either in the interim order or in the present order.

Based on the outcome of the investigation, appropriate proceedings may be initiated in accordance with law, the regulator said.

"...find that the submissions of the entities are insufficient to refute the prima facie conclusions drawn against them in the interim order. Consequently, the prima facie findings in the interim order that the entities engaged in a fraudulent scheme to manipulate price and volumes of the scrip of V Marc India resulting in prima facie contravention of provision of the PFUTP regulations, stand confirmed," Ananth said.

In February, SEBI had passed an interim order and barred 12 entities including promoter of V Marc India, from the securities market for engaging in a fraudulent scheme to manipulate volume and price of the company's shares.

Additionally, the regulator had impounded wrongful gains of Rs 6.38 crore made by some of the entities from the manipulative scheme.

This case primarily deals with fraudulent and manipulative trading in the scrip of V Marc India, listed on NSE’s SME segment prima facie orchestrated by the promoter and company management, along with connected parties.

In its order, SEBI prima facie found that V Marc's promoter and MD Vikas Garg and Sandeep Kumar Srivastava, former Whole-Time Director of the company—engaged the services of Prijesh Kurani to 'operate the market'.

It further noted that Kurani, in turn, in addition to using his own and his connected entities’ trading accounts, engaged accounts of persons connected to Garg to manipulate the scrip.

Further, Garg and the company management channelled funds through their connected entities to Kurani for executing the fraudulent scheme. The alleged fraudulent scheme was set in motion as soon as the scrip was listed on April 8, 2021.

Apart from Garg, Srivastava and Kurani, the other entities barred by SEBI were—Sudhir Gupta, Dharini Kurani, Rekha Kurani, Surbhi Aggarwal, Vinod Vilas Sable, Seema Garg, Madhu Srivastava, Jai Kishorr Singhal and Seema Agarwal.

SEBI's examination, which covered the period from April 9-30, 2021, was aided by data obtained from the mobile device of Kurani, seized following the 'search and seizure operation' carried out by the regulator at his residence in May 2022, in the context of investigation into the matter of 'Front Running of Trades of Axis Mutual Fund'.

The data from the device, particularly messages exchanged on WhatsApp involving entities referred to in this order, including a copy of a signed agreement between certain entities, has served as important evidence in this case.

Thereafter, Garg had challenged SEBI's interim order in the Securities Appellate Tribunal. Further, the tribunal in its ruling on May 8 directed the regulator to pass a fresh order within four weeks.

Thereafter, vide order dated July 15, the appellate tribunal granted additional time till July 30 to pass the order.

(With inputs from PTI)