The Securities and Exchange Board of India (Sebi) barred 18 individuals, including those related to the Choksi group, for allegedly manipulating Retro Green Revolution’s share price in 2021. The regulator directed them to disgorge the ₹2.94-crore “ill-gotten profits” along with an interest of 12% per annum from December 2021 till the date of payment, imposed an aggregate penalty of ₹2.80 crore, and barred them from the market for 3-5 years.
Premeditated Rigging
This is a case where a premeditated scheme has been orchestrated to jack up the price of an illiquid scrip having abysmally thin volumes of trading, Sebi said in an order dated Tuesday. Further, an attempt was made to allure innocent public investors by circulating tips or stock recommendations through Telegram channel, the markets regulator said.
At the end of FY21, Choksi group held about 42% stake in the company and key managerial positions were held by individuals connected to the group. Originally formed as Jolly Tea India Company in 1990, Retro Green was promoted by one of the noticees, Sanjay Arunkumar Choksi, his father, along with other associates in Vadodara.
Orchestrated Exit
The regulator noted that several adjudication orders were passed against Sanjay in the past “for creation of artificial volume and misleading appearance of trading” three other shares and was also imposed a total penalty of ₹28 lakh for the same.
The regulator found that a group of individuals led by Sanjay and five others orchestrated a scheme including funding arrangements and last-traded-price manipulation to inflate the stock price. Following the surge in share price, the Choksi group offloaded illiquid 39.5% stake, enabling them exit from the company at much higher levels.
These six individuals were the ‘main perpetrators of the scheme and created a misleading appearance of trading in the script and also manipulated the stock price. They also funded other entities directly and indirectly for trading in Retro Green’s shares.
Some of the individuals were funded to disseminate stock recommendations through a Telegram channel. Due to the manipulation, the stock price rose 177% during the December quarter of 2021 and volume spiked by 92% following the Telegram recommendations in December 6-10, 2021, enabling exits for the Choksi group, as per the order.
The BSE-listed stock hit its record low of ₹1.28 on Wednesday before closing 0.8% lower at ₹1.33. In the last one year, it has lost 80% of its value.
