The Securities and Exchange Board of India (SEBI) has taken decisive action against seven companies involved in a suspected pump-and-dump operation. The watchdog discovered an alarming price-to-earnings ratio exceeding 400,000, triggering immediate regulatory intervention.
SEBI’s Whole-time Member Ashwani Bhatia announced comprehensive trading restrictions on multiple entities Thursday. The regulatory body barred Pacheli Industrial Finance Ltd and six other companies from participating in securities markets.
Suspicious Loan Transaction Raises Red Flags
Investigators uncovered a questionable Rs 1,000 crore loan arrangement at Pacheli Industrial Finance Ltd. The company, which previously reported minimal revenue, suddenly acquired massive funding without proper disclosure of its intended use.
PIFL’s share price demonstrated remarkable growth, gaining over 191% in just one month. The company’s market value surged from Rs 40 crore to Rs 4,000 crore within eight months, despite negligible operating income.
Complex Web of Fund Round-Tripping Exposed
Further investigation revealed an intricate scheme of fund circulation among connected entities. The loan amount eventually converted to equity shares, resulting in six preferential allottees controlling 99.28% of the company’s shares.
The manipulation strategy relied heavily on restricted share availability in the market. Only 0.72% of shares remained available for trading, allowing artificially inflated prices through controlled trading patterns.
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Regulatory Intervention
SEBI’s swift action aims to protect retail investors from potential losses. The regulator froze shareholding of preferential allottees and implemented trading restrictions before the lock-in period expires in March 2025.
Moreover, authorities discovered that PIFL reported minimal operating revenue of Rs 1.07 crore in FY24. Most of this income came from bad debt recovery and loan interest, rather than core business operations.
The investigation highlighted how the company bypassed natural market dynamics through its concentrated shareholding pattern. This manipulation created an artificial bubble in the stock price, disconnected from fundamental business values.
These are the 7 stocks that got barred by SEBI on for ‘pump & dump’ suspicion:
- Pacheli Industrial Finance Ltd: Focuses on industrial financing and investment services, supporting businesses with growth-oriented financial solutions.
- Abhijit Trading Company : Engages in trading activities, including commodities and other financial assets, catering to diverse market needs.
- Calyx Securities: A financial services provider, specialising in securities trading and investment advisory for retail and institutional clients.
- Hibiscus Holdings: Operates as a holding company, managing investments across various industries and market sectors.
- Avail Financial Services: Offers financial advisory and lending services to individuals and businesses, promoting financial inclusion.
- Edoptica Retail India: A retail-focused company providing optical products and services, targeting consumer needs with innovative solutions.
- Sulphur Securities: Involved in financial services, offering securities trading and related investment services for a broad clientele.
Conclusion
SEBI’s order prevents these entities from accessing capital markets directly or indirectly. The regulator emphasises the importance of maintaining market integrity through proper disclosure and trading practices. Additionally, the regulator expressed concern about the potential market impact when the preferential allotment lock-in expires. This timing prompted immediate preventive measures to protect public investors.
The investigation continues as authorities examine trading patterns and share price movements. SEBI’s actions demonstrate its commitment to maintaining fair market practices and protecting investor interests.
Written By Fazal Ul Vahab C H
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The Securities and Exchange Board of India (SEBI) has taken decisive action against seven companies involved in a suspected pump-and-dump operation. The watchdog discovered an alarming price-to-earnings ratio exceeding 400,000, triggering immediate regulatory intervention. SEBI’s Whole-time Member Ashwani Bhatia announced comprehensive trading restrictions on multiple entities Thursday. The regulatory body barred Pacheli Industrial Finance Ltd
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