SEBI Imposes Ban on LS Industries and Promoters for Stock Price Manipulation
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Synopsis
The Securities and Exchange Board of India has taken strict measures against LS Industries, its promoter Profound Finance, and four other entities for stock manipulation. The investigation revealed serious discrepancies and misleading announcements that inflated stock prices, leading to significant financial losses.
Key Takeaways
- SEBI has prohibited LS Industries and its promoters from the securities market.
- Investigations revealed large fluctuations in stock prices due to manipulation.
- Multiple misleading announcements were made to attract investors.
- Significant penalties and confiscations were imposed by SEBI.
- Investors are warned to be cautious in their investment pursuits.
Mumbai, Feb 11 (NationPress) The Securities and Exchange Board of India (SEBI) took decisive measures against LS Industries Limited, its promoter Profound Finance, and four other organizations, prohibiting them from engaging in the securities market due to allegations of stock price manipulation.
The investigation revealed suspicious trading behaviors, misleading disclosures, and dubious financial dealings, including fund transfers to a non-resident Indian (NRI).
During the inquiry, the regulator noted extreme volatility in the company's stock price.
From July 23, 2024 to September 2024, the stock surged by an astonishing 1,089 percent, rising from Rs 22.5 to Rs 267.5 per share.
Nevertheless, by November 2024, the price plummeted to Rs 42.39. In December 2024, it bounced back to Rs 136.87, only to stabilize at Rs 67.95 in February 2025.
SEBI pinpointed a consortium of traders behind these manipulative actions, including Multiplier Share & Stock Advisors, Setu Securities, Paresh Dhirajlal Shah, and Ruchira Goyal.
These entities reportedly executed substantial buy orders to artificially inflate prices and subsequently liquidated shares, leading to a drop in value.
The investigation also unveiled that LS Industries disseminated multiple deceptive announcements to attract investors.
These announcements included intentions to venture into artificial intelligence (AI) and robotics, hiring foreign executives, establishing a subsidiary in Dubai, and acquiring Robochef India Private Limited.
SEBI found that directors of Robochef were actively trading in LS Industries’ shares while the stock was at its peak.
In a comprehensive order, SEBI Whole Time Member Ashwani Bhatia indicated that the investigation should conclude by May 15, 2025.
"I wish to advise investors to exercise caution. It is observed that investors sometimes act without due caution or reasoning," Bhatia stated in the order.
He further emphasized that investors, in their blind quest for profit through investments in companies lacking substantial fundamentals, resemble children following the legendary pied-piper of Hamelin.
"While markets can be benevolent at times, they cannot be overly generous to yield extraordinary profits," Bhatia remarked.
Furthermore, the regulator confiscated Rs 1.14 crore as illicit earnings from these manipulative practices.
