SEBI imposes Rs 2 lakh fine on Minerva Textiles

SEBI has imposed a penalty of Rs two lakh on Minerva Textiles for allegedly not providing details sought by market regulator's Investigation Authority (IA) regarding a probe in shares of Murli Industries Ltd (MIL).

SEBI on various occasions had served Minerva Textiles with summons asking for details related to price manipulation in shares of MIL by certain entities. "...it is now established that the noticee, failed to provide necessary information/documents to the IA in response to the summons dated October 18, 2011 & December 08, 2011 and October 20, 2011 & December 08, 2011," SEBI said in an order dated December 28.

The Income Tax Department (ITD) had referred to SEBI certain findings in the matter of MIL that suggested that 10 firms incorporated by the company to be "dummy". These firms had together cornered a large part of the shareholding of MIL.

Further, ITD had said noted that the price of the MIL scrip was manipulated by the certain entities for the purpose of issuing Foreign Currency Convertible Bond (FCCB) at a higher price than what was the correct price. "In view of the prima facie finding that certain dummy companies were incorporated to deal in the scrip of MIL and the reference from ITD pointing out to possible manipulation by Dangi/Ashika group entities for influencing the FCCB pricing, the IA (SEBI) was conducting detailed investigations in respect of dealings in the scrip of MIL," SEBI said.

The probe revealed that Minerva Textiles had applied for shares of some of the dummy companies incorporated by MIL. As a result, SEBI had sought information from Minerva Textiles regarding its investment in the companies. It had also asked Minerva Textiles to details regarding other private limited companies in which it had made investments as well as its connections with certain other entities.