Sebi seizes Choksi’s assets to recover Rs 2.1 Cr dues

The Securities and Exchange Board of India (Sebi) has taken action against fugitive jeweler Mehul Choksi due to his involvement in insider trading related to Gitanjali Gems. Choksi, who was the chairman and managing director of Gitanjali Gems and is the uncle of fugitive Nirav Modi, has been directed by Sebi to pay outstanding dues amounting to Rs 2.1 crore.

Choksi was issued a demand notice on May 15, giving him 15 days to settle the fines imposed by Sebi in January 2022 for violating insider trading rules in Gitanjali Gems shares. Failure to make the payment has resulted in Sebi ordering the attachment of Choksi’s bank accounts, shares, and mutual fund holdings.

Both Choksi and Modi have been accused of defrauding the Punjab National Bank (PNB) of over Rs 14,000 crore, leading to their escape from India in the wake of the PNB scam in 2018. Choksi was taken into custody in Belgium in April, following an extradition request from Indian investigative agencies. He had been residing in Antigua since 2018 after departing from India.

On the other hand, Modi was arrested by the Scotland Yard Police in March 2019 and remains imprisoned in the UK. Sebi’s recent move to attach Choksi’s assets, including the initial fine of Rs 1.5 crore and interest of Rs 60 lakh, aims to recover the outstanding dues from the errant promoter.

The regulator has directed banks, depositories, and mutual funds to freeze Choksi’s accounts and prevent any withdrawals, while permitting credits. This measure intends to prevent Choksi from disposing of his assets, which might delay or hinder the recovery of the outstanding amounts. Additionally, Sebi has ordered the attachment of all accounts, including lockers, held by Choksi.

Sebi’s probe revealed that Choksi shared confidential price-sensitive information with Rakesh Gajera, leading to the latter selling his shares in Gitanjali Gems to avoid losses due to impending disclosures of fraudulent activities in the company. This communication of unpublished price-sensitive information violated insider trading rules, resulting in Sebi imposing a penalty of Rs 1.5 crore on Choksi and barring him from the securities market for a year.

Choksi was found to have breached the Prohibition of Insider Trading rules by sharing sensitive information with Gajera without any legal obligation or legitimate purpose. Sebi’s continuous efforts to hold Choksi accountable for his fraudulent activities demonstrate its commitment to enforcing regulatory compliance in the securities market.