Sebi bars Pine, 177 others for money laundering

In a fresh clampdown on misuse of stock market platform for money laundering activity, Sebi on Friday banned Pine Animation and 177 related entities from securities market for Rs 420 crore tax evasion. In December last year it had barred 260 entities from the securities markets, for indulging in similar activities.

The latest ban has been imposed on 178 entities, including Pine, its two promoters and eight directors. Noting that stock exchange system cannot be permitted to be used for any unlawful/ forbidden activities, Sebi on Friday said that “prima facie” certain market manipulations are taking place in the scrip of Pine.

“... it can safely be assumed that the entire modus operandi of allotting shares on a preferential basis, announcing a stock split and then bringing in connected entities to provide exit was a scheme devised to make ill-gotten gains,” the regulator said.

Sebi also noted that the modus operandi of pumping up the share price artificially and then dumping the price so that the same cycle could be repeated, demonstrates the malafide intention of the Pine Group. “Also the mechanism is presumably being used to deceive the authorities by laundering black money and making tax-free profits,” it said. In a 40-page order, Sebi said the preferential allottees and promoter related entities, who are still holding the company’s shares, might potentially book a bogus tax exempt Long Term Capital Gains (LTCG) of about Rs 420 crore.

After finding them guilty of manipulation in the stock market for making illegal gains, Sebi has restrained the 178 entities, including Pine Animation, from “accessing the securities market and buying, selling or dealing in securities, either directly or indirectly, in any manner, till further directions”. 

The irregularities came to the notice of Sebi after it detected a huge rise in the traded volumes and price of the Pine shares on the BSE during the period from May 22, 2013 to January 30, 2015. Two groups of entities were mainly involved in the alleged manipulations with one group primarily involved in pushing the price up when the scrips allotted in preferential allotments were under 

lock-in period.