Sebi bans LS Industries, Promoter, 4 Others

New Delhi: Sebi on Tuesday restrained Himachal Pradesh-based LS Industries, its promoter Profound Finance and four others from the securities markets till further orders following allegations of fraudulent activities and stock price manipulation.

The markets regulator also directed Jahangir Panikkaveettil Perumbarambathu (JPP), a Dubai-based NRI public shareholder, to impound unlawful gains of Rs1.14 crore from the sale of shares as part of a prima facie fraudulent scheme, the order said. Suresh Goyal, Alka Sahni, Shashi Kant Sahni HUF and JPP were also prohibited from the securities market by Sebi till further orders. The regulator directed the entities to co-operate with Sebi’s investigation by furnishing all relevant information.

The matter pertains to LS Industries and its key associates were involved in artificially inflating the company’s share price despite negligible revenue and financial instability. In an interim order passed on Tuesday, Sebi noted that LS Industries Ltd (LSIL), a BSE-listed entity, and its promoter devised a scheme in which the former director of the company, Suet Meng Chay, initially transferred a 12.12 per cent stake of the company to JPP for just USD 1. Subsequently, entities, including Multiplier Share & Stock Advisors Pvt Ltd, Setu Securities, Paresh Dhirajlal Shah and Ruchira Goyal were involved in triggering a sharp spike and fall in the company's scrip.

Further, contrary to all the positive announcements made by LS Industries, when the stock hit a high of Rs 267.50 on September 27, last year, JPP offloaded some of its shares at the peak price. His trading pattern also indicated that he sold most of his shares only during the period when there was a price rise, particularly in two patches between July and September (Patch -I) and November to December (Patch-III), the order said.

"It was prima facie observed that LSIL, its promoter Profound Finance, JPP, Suresh Goyal, Alka Sahni and Shashi Kant Sahni HUF were part of a manipulative scheme designed to defraud the investors. "Accordingly, they are alleged to have prima facie violated the provisions of of PFUTP regulations," Sebi's whole time member Ashwani Bhatia said in the order.