SEBI v. Mehul C. Choksi (Gitanjali Gems front entities, 2022)

Judgment entered

✓ Checked against the primary document on October 8, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, in a single reading of the order; an independent second reading of 60 SEBI records agreed on every field for 56, the four misses being penalty amounts; a later sample of 50 of the SEBI records added on 9 October agreed on every field for 46. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.

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On 31 October 2022 a SEBI whole-time member barred Mehul Choksi, former chairman and managing director of Gitanjali Gems, from the securities market for ten years and fined him Rs 5 crore. The order finds he used connected front entities, funded through layered transfers, to trade the company's shares and derivatives in 2011-12.

The record

What was ordered

Civil penalty

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Disgorgement

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Prejudgment interest

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Total relief

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Alleged gain

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Penalty as published

50m INR

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars. This regulator states penalties in INR. The figure is recorded as published and is not converted, so it does not appear in the USD totals or medians used elsewhere on this site.

What is alleged to have happened

Gitanjali Gems Ltd was listed on BSE and NSE; its trading has been suspended and the company has been in insolvency proceedings since October 2018. The noticee, Mehul C. Choksi, was its chairman and managing director and a promoter. SEBI investigated trading between 18 July 2011 and 25 January 2012, a period when the company's share price barely moved while the broader market fell by about 8 percent.

SEBI's notice of May 2022 alleged that 21 connected entities, six of them in the promoter group and the other fifteen so-called front entities, were linked by shared phone numbers, addresses, emails and fund transfers, and that the front entities took positions in the company's shares and derivatives on Mr Choksi's behalf. It alleged that the company moved money to and from these entities in layered transfers, used partly to meet their margin and settlement obligations, that the entities built derivatives positions equal to 15.7 to 56.65 percent of the market-wide position limit, and that this created a false appearance of trading. It said he used the front entities because a director could not hold derivatives positions or do contra trades in his own account.

The whole-time member found the allegations established, holding that Mr Choksi breached section 12A of the SEBI Act and the fraud-prevention rules in the PFUTP Regulations through the front entities. He ordered a ten-year restraint from the securities market and a penalty of Rs 5 crore, payable in 45 days. The order notes an earlier one-year market ban imposed on Mr Choksi in January 2022 for insider trading violations.

The order also records, as background, that Mr Choksi left India in January 2018 and lives in Antigua and Barbuda, and that Indian agencies have brought criminal and money-laundering cases and a charge sheet in connection with the Punjab National Bank fraud. Those cases concern a different matter, so this record does not treat them as parallel to this one.

The record does not show whether the order was appealed, whether the penalty can be collected, or what profit the trading generated.

This library tags the matter as price manipulation through front entities. The tagging is ours, not the regulator's.

For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the order.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Price manipulation — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2022-10-31 SEBI order

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEBI order

The linked release is published by the issuing regulator under its own terms. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added October 8, 2026. submit a correction.