Sebi Demands Rs 2.1 Cr from Mehul Choksi for Insider Trading

New Delhi, May 19 (PTI) Markets regulator Sebi has sent a notice to absconding diamantaire Mehul Choksi asking him to pay Rs 2.1 crore in a case of violation of insider trading rules in the shares of Gitanjali Gems Ltd and warned of attachment of assets as well as bank accounts if he fails to make the payment within 15 days.

The demand notice came after Choksi failed to pay the fine imposed by the Securities and Exchange Board of India (Sebi) in January 2022.

Choksi, who was the chairman and managing director as well as part of promoter group of Gitanjali Gems, is the maternal uncle of Nirav Modi. Both are facing charges of defrauding state-owned Punjab National Bank (PNB) of more than Rs 14,000 crore. Choksi and Modi fled India after the PNB scam came to light in early 2018.

Last month, Choksi was arrested in Belgium following an extradition request by Indian probe agencies. He was located in Belgium last year when he went there on the grounds of getting medical treatment. He had been staying in Antigua since 2018 after leaving India.

Modi was arrested by the Scotland Yard Police in March 2019 and is currently lodged in jail in that country. In a fresh recovery notice dated May 15, the Securities and Exchanges Board of India (Sebi) directed Choksi to pay Rs 2.1 crore within 15 days. This included a penalty of Rs 1.5 crore and an interest of Rs 60 lakh. In the event of non-payment of dues, the market regulator said it will recover the amount by attaching and selling his moveable and immovable properties.

Besides, Choksi faces attachment of his bank accounts and arrest.

In its order passed in January 2022, the regulator imposed a penalty of Rs 1.5 crore on Choksi and restrained him from the securities market for one year.

Sebi had found that Choksi communicated UPSI to one Rakesh Girdharlal Gajera, who sold his entire shareholding of 5.75 per cent in Gitanjali Gems in December 2017 with the intention of avoiding loss ahead of any event which may lead to disclosure of fraudulent issuance of LoUs (letter of undertaking)to Gitanjali Group and its magnitude in public domain.

It was noted that fraudulent LOUs were issued on behalf of entities belonging to the Gitanjali Group, including GGL.

"Noticee no. 1 (Choksi) was found to have communicated UPSI (unpublished price sensitive information) to Noticee no. 2 (Gajera) without any underlying legal obligation or any legitimate purpose," Sebi had said in its final order.

Through such activities, the two persons had violated the provisions of PIT (Prohibition of Insider Trading) rules. In May 2023, Sebi had sent a notice to Choksi directing him to pay Rs 5.35 crore in a case pertaining to fraudulent trading in the shares of Gitanjali Gems.