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NSEL defaulters among banned Sebi entities

December 29
23:29 2014

Senior officials of companies declared defaulters in the Rs 5,574-crore National Spot Exchange (NSEL) payment crisis are among 260 entities barred by the capital markets regulator in another securities market scam.

The Securities and Exchange Board of India (Sebi) on December 19 barred 260 entities for stock market manipulation and suspected money laundering. Data from an exchange-sponsored registry of regulatory orders, watchoutinvestors.com, shows, for instance, that the names of Mohit Aggarwal and Shilpa Aggarwal also figured in the NSEL payment crises.

Business Standard confirmed that these were the same individuals, through an analysis involving their PAN numbers, an NSEL advertisement declaring them defaulters and a draft offer document dated August 2013 that Aastha Minmet filed with Sebi for a public issue. The fact that these were the same individuals was also checked against photographs given in the offer document and the NSEL advertisement.

Mohit Aggarwal, managing director of the Aastha Group, and Shilpa Aggarwal, a director with the Group, have been barred by Sebi for their association with Radford Global. They were part of a list of 260 entities related to First Financial Services and Radford Global, involved in alleged fraud through misuse of the stock exchange platform to convert unaccounted money into legitimate money. The amount involved has been pegged at Rs 485 crore.

“…the modus operandi of allotting shares on preferential basis at a premium, pumping the share price artificially and then dumping the price so that the same cycle could be repeated… is being presumably used to deceive the authorities by laundering black money and raking in tax-free profits,” said the order.

Interestingly, the enforcement directorate (ED) was investigating the Aastha Group under the Prevention of Money Laundering Act (PMLA) during the NSEL crises.

Six companies associated with the Group had been declared defaulters by NSEL for failing to make payments owed to the exchange. The six companies – Aastha Minmet India, Juggernaut Projects, Aastha Alloycorp, Ragam Mines, Southern Ispat and Energy and Vbg Infrastructure – were borrowers of NSEL, with a payment obligation totalling Rs 242.6 crore as of this May.

Interestingly, the Aastha website presently lists only Aastha Minmet and Aastha Alloycorp as being part of the group. The ED had attached Aastha Group’s properties in Thane and Mumbai in March this year, according to reports.

An email sent to Aastha Group remained unanswered.

“…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 the order passed by Sebi wholetime member Rajeev Kumar Agarwal.

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

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