In a strongly-worded order, the Securities and Exchange Board of India (Sebi) said that the illegal activities undertaken by these 13 entities can "jeopardise and tarnish the image of the securities market as a transparent and efficient way of raising capital, shaking the very foundation of capital market in India."
    
A detailed probe by Sebi found that these entities actively traded in the shares of GDR-issuer companies and thereby facilitated the sub accounts of Foreign Institutional Investors (FIIs) in selling those shares in Indian markets.
     
In a 48-page order, Sebi has consequently barred Basmati Securities, Oudh Finance and Investment, Alka India, SV Enterprise/Sarfaraz Khan Pathan, Ashok Panchariya, Madanlal Girdharilal Bugualiya and Indra Varun Trade Impex from the capital markets for five years.
    
Others facing the prohibition include Delight Financial Advisors, Vinod Amrutlaal Naai, Newgen International, Excel Paints, Cherry Cosmetics and Edelweiss Estate.
     
Taking a lenient view in the Gujarat Enterprise case, Sebi however said the company did not trade in the shares of GDR issued firms but it is alleged to have acted as layer between the 13 entities for transfer of funds.
     
Although, Sebi warned Gujarat Enterprise to "ensure that all its future dealings in the securities markets may be done strictly in accordance with law."
     
Regulator also said that SV Enterprise, Oudh Finance and Investment, Basmati Securities and Alka India have already undergone a debarment of three years.
     
The prohibition already gone by these firms following a Sebi's interim order in September 2011 "shall be reduced while computing the period of debarment being imposed with this order."
     
The Sebi probe revealed that GDR issue was devised by Pancharia in connivance with the issuer firms – Asahi Infrastructure & Projects, K Sera Sera, IKF Technologies, Avon Corp, CAT Technologies and Maars Software International -- through a fraudulent manner. All of them made at least one GDR issue during 2007-09.
    
The securities were subsequently offloaded to Indian investors through various entities connected to Panchariya.

The 13 entities were connected to Panchariya and collectively referred as CP Group.
        
Sebi, through its interim order in September 2011, banned these issuer companies from issuing equity shares or any other instrument convertible into equities.
        
"I am of the considered view that trades in the scrip of the issuer companies were carried out by the CP group alongwith sub accounts in an irregular and manipulative nature," Sebi Whole Time Member S Raman said in its final order dated September 19 this year.

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