Vijay Rupani Rejects SEBI’s Stock Rigging Charge, Says Sold Shares At A Loss

Gujarat Chief Minister Vijay Rupani refuted the market regulator's charges against his family entity of rigging the stock price of a company even as he won relief from the appellate tribunal.

“I have nothing to do with Sarang Chemical, the company in question,” he said in an exclusive interview with BloombergQuint. He held the shares of the firm for 18 months and sold them at a loss, Rupani said.

The Securities and Exchange Board of India, in an October 27 order, had said that 22 entities, including the Hindu Undivided Family of Rupani, manipulated the stock price of Sarang Chemicals between Jan. 3 and June 8 in 2011. It also imposed a fine of Rs 15 lakh on him. One of the entities named challenged the move at the Securities Appellate Tribunal, which set aside the order and asked the regulator to hear the case afresh.

“They (the tribunal) have followed the course of natural justice, that the matter should be heard before a decision is taken. We have done nothing wrong," he said.

He was actively involved with the Rajkot-based Saurashtra Kutch Stock Exchange, Rupani said. “I was not the chief minister or even an MLA when I purchased the shares. These were bought through the exchange, and I paid a transaction tax on it.”

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SEBI Investigation

The regulator identified 21 entities as connected either through a common address, telephone number, off-market transfers of shares and family members. Its probe report said these entities bought 2.76 crore shares—32.97 percent of the total market volume—and sold 7.24 crore shares or 86.18 percent of the total volume during the period.

Sixteen of these entities, excluding Rupani's HUF, traded among themselves between January and March 2011, pushing up the stock price, it said. The Rupani HUF's account reflected only a sale of shares between March and June 2011, along with these entities, SEBI said.

“The sale too was done via my demat account. So the question of speculation, or a debate on it, does not arise,” said Rupani. “This was done via a single transaction. Those people (speculators) do 50 transactions a day over 2-3 months, and then sell after raising the price. I know nothing about that, there's nothing here.”

Gujarat Elections

Congress Vice-President Rahul Gandhi has been raising the SEBI order during the election campaign in Gujarat, challenged Prime Minister Modi to speak out on the issue.

“I'm not sure that Rahul Gandhi knows what SEBI, transaction, speculation, delivery-based trading are. Someone writes him notes, he raises questions based on that,” Rupani said. Gandhi is trying to politicise it since he has found no other issue, Rupani said.