Sebi Market Ban: Sebi Extends Ban on LS Industries Amid Fraud Allegations, ET LegalWorld
Profound Finance (promoter of LS Industries), Jahangir Panikkaveettil Perumbarambathu, a Dubai-based NRI public shareholder of LS Industries, Suresh Goyal, Alka Sahni, Shashi Kant Sahni HUF have also been prohibited from the markets.
"...hereby confirm the directions issued vide the interim order dated February 11, 2025," Sebi's whole-time member Ashwani Bhatia said in the confirmatory order.
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The markets watchdog also said the timeline to complete the investigation in this matter is extended to November 15 and the entities are directed to cooperate with Sebi's probe in the right earnest.In February this year, Sebi had passed an interim order and restrained LS Industries, Profound Finance and four others from the securities markets following allegations of fraudulent activities and stock price manipulation.Sebi had also directed Perumbarambathu to impound unlawful gains of Rs 1.14 crore from the sale of shares as part of a prima facie fraudulent scheme.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 the interim order, Sebi noted that LS Industries reported negligible revenue in the last three financial years (FY22-FY24) and first three quarters of FY25, which indicated that the company was not doing any business during this period.Despite poor financials, the share price of LSIL rose by over 10 times from Rs 22.50 to a high of Rs 267.50 between July 23, 2024 and September 27, 2024, with the company reaching a peak market capitalisation of about Rs 22,700 crore.The sudden price movement in the scrip without any meaningful change in fundamentals, the dubious transfer of shares to Perumbarambathu, and the suspicious trading patterns of certain entities came under the scanner.It prima facie appeared that the entities were part of a manipulative scheme designed to defraud investors and allegedly violated the provisions of PFUTP ( Prohibition of Fraudulent and Unfair Trade Practices ) rules.
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