Sebi's ban list includes many repeat offenders

The list of 260 entities barred by the capital markets regulator on Friday contains many habitual offenders. First Financial Services has on previous occasions been pulled up by the BSE, National Stock Exchange (NSE) and the Securities and Exchange Board of India (Sebi).

While Radford Global, another entity barred by the Sebi, has never been pulled up before, at least a dozen entities related to Radford have been pulled up by Sebi and both NSE and BSE on previous occasions, showed an analysis of past orders based on data from an exchange-sponsored investor-protection website.

According to watchoutinvestors.com, an investor-protection website created by Prime Investor Protection Association & League and sponsored by NSE and BSE, these entities had been censured for a range of activities, including non-compliance with the listing agreement, Sebi takeover regulations, alleged failure in fulfilling its underwriting obligations, and indulgence in price manipulation.

In 1998, First Financial’s application to establish itself as a non-banking financial company was rejected by the Reserve Bank of India. A year earlier, Sebi had suspended First Financial's registration as a merchant banker for the period between May 1997 and 1999 for failing to fulfil its underwriting obligations during the public issue of Ritesh Polyester in 1995.

In the case of Radford Global, the company had not yet been censured by Sebi but entities related to the company have been in the dock for various offences. For example, Shilpa Stock Broker, one of the entities barred by Sebi in connection with Radford, resolved its matter via consent orders and paid settlement charges amounting to Rs 9 lakh between 2008 and 2010. The case of artificial market and price manipulation against Burlington Finance was settled via a consent order, by paying Rs 10 lakh as settlement charges.

On Friday, Sebi had barred 260 entities related to First Financial Services and Radford Global for alleged fraud through the misuse of the stock exchange platform to convert black money into legitimate money. The amount involved has been pegged at Rs 485 crore.

“...the scheme, plan, device and artifice employed in this case, apart from being a possible case of money laundering or tax evasion, which could be seen by the concerned law enforcement agencies separately, is prima-facie also a fraud in the securities market," said whole-time member Rajeev Kumar Agarwal in the order passed on Friday.

The order also stated the case could be referred to other law enforcement agencies such as the income tax department, enforcement directorate and Financial Intelligence Unit.