In a recent development, the Securities and Exchange Board of India (SEBI) has taken a decisive step against market malpractices by imposing a fine of ₹48 lakh on eight entities involved in the alleged stock price manipulation of United Polyfab Gujarat Ltd (UPGL). The regulatory body’s action comes after a thorough investigation into the trading activities of UPGL and certain entities, shedding light on a scheme designed to artificially inflate the company’s share price and market capitalization.

SEBI Investigative Proceedings

The investigative proceedings initiated by SEBI focused on scrutinizing UPGL’s trading activities and those of key entities associated with the company. The primary objective was to identify any contravention of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations. As a result of the investigation’s findings, SEBI proceeded to launch adjudication proceedings against the entities involved.

Notice and Adjudication

On July 18, 2023, SEBI issued a show-cause notice to the accused entities, providing a detailed account of the collusion between UPGL, Gagan Nirmalkumar Mittal, and others. The notice exposed a meticulously orchestrated scheme aimed at inflating UPGL’s share price and market capitalization, with the ultimate goal of facilitating its transition from the National Stock Exchange’s SME Platform ‘Emerge’ to its Main Board.

Verdict and Penalty

Shashi Kumar Valsakumar, the Adjudicating Officer at SEBI, meticulously examined the allegations of PFUTP violations against UPGL, Gagan Nirmalkumar Mittal, and the other accused entities. Confirming the fraudulent activities, SEBI has imposed a penalty of ₹48 lakh on the involved parties. The regulatory order mandates that the fine must be collectively remitted within a 45-day timeframe, underscoring the severity of the violations and the need for swift corrective action.

SEBI’s resolute action against stock price manipulation demonstrates the regulatory body’s commitment to maintaining the integrity of the securities market. The imposition of a significant fine on UPGL and associated entities serves as a deterrent against fraudulent practices, sending a clear message that market manipulation will not be tolerated. As investors and stakeholders await the fulfillment of the penalty within the stipulated timeframe, this case highlights the importance of vigilant regulatory oversight to ensure a fair and transparent trading environment in India’s financial markets.