SEBI Bans 240 Entities for Faking Capital Gains


Probe finds stock prices artificially hiked in order to post fake tax-free LTCG, facilitating conversion of unaccounted income

MUMBAI: Business Standard reported that In yet another clampdown against entities using the stock market for evasion of taxes, capital market regulator Securities Exchange Board of India (SEBI) barred Kailash Auto Finance Ltd, its promoters and over 240 entities from the securities market for generating fake long terms capital gains.

SEBIThe probe found share prices of the stock were “artificially” being raised on the exchanges in order to register “bogus” or fake claims of LTCG. Given the seriousness of the issue, SEBI passed an exparte order on Tuesday, March 29, 2016 .

“The connected entities, acting in concert under a premeditated plan, had acquired dominant market power for the shares of Kailash Auto. Their acts, conduct, behavior and dealings connote a deceptive conduct designed to deceive or defraud investors by controlling or artificially affecting the price of shares of Kailash Auto since being in dominant position to control supply and demand both they interfered with free forces of supply and demand,” Rajiv Agarwal, whole-time member, SEBI wrote in an order.

Further, the related entities have grossly misused the stock exchange system to generate bogus LTCG to aid and help beneficiaries to convert their unaccounted income into accounted one with no payment of taxes as LTCG is tax exempt.

SEBI also observed that manipulation in the traded volume and price of the scrip by a group of connected entities has potential to further induce unsuspecting and gullible investors to trade in the scrip and harm them.

Interim Order in the matter of Kailash Auto Finance Ltd.

Website of Kailash Auto Finance:

(Business Standard) 

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