SEBI Issues ₹2.1 Crore Recovery Notice To Mehul Choksi For Insider Trading Violation
SEBI Issues ₹2.1 Crore Recovery Notice To Mehul Choksi For Insider Trading Violation
Markets regulator Securities and Exchange Board of India (SEBI) has issued a notice to absconding diamantaire Mehul Choksi, directing him to pay ₹2.1 crore for violating insider trading rules related to the shares of Gitanjali Gems Ltd.
Choksi has been given 15 days to make the payment, failing which his assets and bank accounts may be attached. This action follows a previous penalty imposed by Sebi in January 2022.
Choksi, the former Chairman and Managing Director of Gitanjali Gems and a part of its promoter group, is also the maternal uncle of Nirav Modi. Both are accused of defrauding Punjab National Bank (PNB) of over ₹14,000 crore and fled India after the scam surfaced in early 2018.
Last month, Choksi was arrested in Belgium following an extradition request by Indian authorities. He had been residing in Antigua since 2018, and had reportedly travelled to Belgium for medical treatment.
Nirav Modi was arrested in March 2019 by Scotland Yard and remains in a UK prison.
In a fresh recovery notice dated May 15, Sebi directed Choksi to pay ₹2.1 crore, comprising a ₹1.5 crore penalty and ₹60 lakh in interest. In the event of non-payment, Sebi will proceed to recover the dues by attaching and auctioning Choksi’s movable and immovable assets.
Additionally, his bank accounts may also be attached and he may face arrest.
In its January 2022 order, Sebi imposed a ₹1.5 crore penalty on Choksi and barred him from the securities market for one year.
Sebi found that Choksi had communicated Unpublished Price Sensitive Information (UPSI) to Rakesh Girdharlal Gajera, who then sold his entire 5.75% shareholding in Gitanjali Gems in December 2017 to avoid losses. This move came just before disclosure of fraudulent Letters of Undertaking (LoUs) issued on behalf of Gitanjali Group entities, including Gitanjali Gems Ltd (GGL).
Sebi’s final order stated, "Noticee No. 1 (Choksi) was found to have communicated UPSI to Noticee No. 2 (Gajera) without any legal obligation or legitimate purpose."
Both individuals were found to have violated provisions of the Prohibition of Insider Trading (PIT) Regulations.
In May 2023, Sebi had also issued another notice to Choksi demanding ₹5.35 crore in a separate case involving fraudulent trading in Gitanjali Gems shares.
