The Securities and Exchange Board of India (SEBI) today disposed of charges against NBFC firm India Infoline Finance in a case related to shares of Parekh Aluminex Ltd (PAL).

At the same time, the capital market regulator SEBI has also abated the proceedings in the case against PAL Chairman and Managing Director Amitabh Arun Parekh on account of his death in 2013.

The SEBI in its show-cause notice had alleged that Parekh and India Infoline Finance had violated norms related to prevention of insider trading as well as prohibition of fraudulent trading activities.

In a ruling today, the SEBI said that the “adjudication proceedings initiated against Noticee No 1 (Amitabh Arun Parekh) stand abated and the charges levelled against Noticee No. 2 (India Infoline Finance Ltd), do not stand established and the matter is, accordingly, disposed of”.

The regulator’s probe found that Parekh had acquired 80,000 shares (0.62 per cent stake) of PAL on September 6, 2010 and had transferred them to a demat securities account of India Infoline Finance, within six months of the transaction.

Further, the entire transaction was reversed on February 16, 2011. The transfer of shares had resulted in promoter shareholding falling in December 2010 quarter and rising back again in January 2011 quarter.

In the order, the SEBI said it did not find “any malicious intent on the part of Noticee No 2 (India Infoline Finance) in keeping the shares of PAL in its own account till February 16, 2011 and later transferring them back to the demat account of Noticee No 1 (Parekh)”.

“...the said transaction was purely a loan agreement between the noticees and did not amount to any fraudulent activity,” the SEBI added.

The market regulator said that India Infoline’s act related to transaction of 80,000 shares of PAL did not amount to a sale of shares and is only a pledge, which was performed in the due course of its business.

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