Sebi cracks down on Elitecon over ‘rosy’ financial claims

Markets regulator Sebi has barred Elitecon International Ltd, its Promoter and Managing Director Vipin Sharma, and four others from accessing the securities market over alleged manipulative activities and misleading disclosures.

In an interim ex-parte order passed on Monday, Sebi directed the impounding of alleged unlawful gains of about Rs 51.26 crore from Sharma and four other entities.

Additionally, the Securities and Exchange Board of India (Sebi) said it will conduct a detailed investigation into the case and appoint a forensic auditor. The action follows a probe into trading in the scrip of Elitecon International, where the regulator found prima facie evidence that the company and its insiders misled investors by suppressing material information about its operations and financials, while simultaneously offloading shares at inflated prices.

Sebi alleged that the company suppressed material information to present a misleading picture of its financials and operations. It noted that while positive disclosures were made, certain adverse developments, including GST-related proceedings, were not adequately communicated to investors.

“Only a rosy picture w.r.t. the financials, functioning of the company was being presented to the outside world,” Sebi said in its 82-page order.

The regulator added that such selective disclosures created positive market sentiment and induced investors to buy the stock, even as promoters and connected entities were offloading shares.