Sebi closes probe into former Unitech promoters, cites lack of evidence

The Securities and Exchange Board of India (Sebi) has closed an investigation against Unitech Ltd's former promoters Sanjay Chandra and Ajay Chandra over allegations of stock manipulation. 

The markets regulator had initiated the investigation on its own to ascertain whether there was any routing of funds to the securities market through the Switzerland-based bank UBS AG during April 1, 2006 to March 31, 2008. 

Lack of sufficient corroborative evidence

Sebi chief general manager G. Ramar, the adjudicating officer in the case, observed in the order that there was a lack of sufficient corroborative evidence to establish the allegation that the brothers had dealt with Unitech securities in a fraudulent manner. 

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“I do not find sufficient corroborative evidence, either in the IR or in the material made available along with the IR to establish the allegation that noticees (former promoters) have dealt in securities of Unitech indirectly in a fraudulent manner and employed manipulative and deceptive practices in connections with the purchase and sale of securities of Unitech or have misrepresented the truth and concealed a material fact known to them of buying the shares of Unitech fraudulently," Ramar noted. 

Sebi had noticed during initial investigations that employees of UBS were communicating with the former promoters on the latter’s request to subscribe to Pluri Emerging Companies PCC Fund for a certain amount for the account of United Corporate Parks Plc (connected to Unitech). 

It was alleged that the funds were transferred by the Chandra brothers from Indian accounts of Unitech to various overseas subsidiaries of Unitech. Thereafter, these parked funds in the UBS accounts were ultimately routed to Pluri which were directly or indirectly used to buy the shares of Unitech Ltd. 

Sebi found that the end-use of the money transferred by United to its foreign subsidiary Unitech Overseas Ltd has not been traced in the absence of the details of bank transactions and without any other supporting documentary evidence. 

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