New Delhi: An unholy nexus has come under the scanner involving builders, brokers and Bollywood entities as a multi-agency probe get underway to pierce the corporate veil of hundreds of suspected shell companies.
Sebi has begun shooting off show-cause notices to 331 listed entities, suspected to have acted as 'shell companies' for those with illicit funds, while action has also begun against more than 100 unlisted entities that could have traded in stocks with laundered money, top regulatory and government sources said.
While the capital market regulator Sebi's decision to restrict share trading has been reversed in the case of some firms after they approached the Securities Appellate Tribunal, it has been permitted to go ahead with its probe against them and others who could have violated securities laws.
While many of these companies have gone public to deny any wrongdoing and have said they are not 'shell companies', a top official said a wrong perception has got created about this nomenclature and even established and well-known firms can act as 'shell companies' by providing a platform for money laundering and converting black money into white.
While several small brokers are already in the list of 'suspected shell firms', their links to bigger brokerage groups are being probed by Sebi, another official said.
Also under the scanner is the role of some brokers in creating a 'panic-like situation' in the stock market after Sebi's action to restrict trading in shares of 331 firms, he said, while adding that the move would have safeguarded the interest of minority shareholders but the brokers with their 'skin in the game' wanted to get their money out.
As Sebi (Securities and Exchange Board of India) continues its probe, affairs of these companies are also being looked into by agencies such as I-T Department, ED and SFIO (Serious Fraud Investigation Office) to unravel what one top regulatory official described as a "big black money bonhomie".
Several of these firms are also suspected to have indulged in huge cash dealings post-demonetisation.
Marking coordinated efforts on their parts, the regulatory and investigative agencies are sharing their investigation reports with each other, the official said.
Citing official documents and preliminary probe findings, multiple regulatory and government officials said nearly 500 entities (including listed and unlisted ones) are currently being probed but some of the names have not been made public yet due to the sensitivity of the matter and to safeguard the investigation process.
Any action against such 'big names' would take place after the investigation has reached some conclusive stage, they added.