A 'black money bonhomie' has come under the scanner involving builders, stock brokers and Bollywood entities as a multi-agency probe gets underway to pierce the corporate veil of hundreds of suspected shell companies, according to PTI reports.
Markets regulator the Securities and Exchange Board of India (SEBI) has begun shooting off show-cause notices to 331 listed entities, suspected to have acted as 'shell companies' for those with illicit funds, while action has also begun against more than 100 unlisted entities that could have traded in stocks with laundered money, top regulatory and government sources said.
While the capital market regulator's decision to restrict share trading has been reversed in case of some firms after they approached the Securities Appellate Tribunal, it has been permitted to go ahead with its probe against them and others who could have violated securities laws.
Also under the scanner is the role of some brokers in creating a panic-like situation in the stock market after Sebi's restrict trading in shares of 331 firms, a official told Firstpost. He further said that the move would have safeguarded the interest of minority shareholders but the brokers with their skin in the game wanted to get their money out.
More than 13,000 shell companies were identified by investigation agencies following the demonetisation process initiated by the government in November last year.
The regulator cum watchdog continues probe, affairs of these companies are also being looked into by different agencies such as (Income Tax) I-T Department, (Enforcing Directorate) ED and SFIO (Serious Fraud Investigation Office) to unravel what one top regulatory official described is a "big black money bonhomie."
The regulator and investigative agencies are working in a co-ordinated manner and are sharing their investigation reports with each other, the official told Firstpost.
The last week's action on suspected 331 listed firms has already been followed up with Sebi asking exchanges and brokers to verify credentials of 107 unlisted entities and barred them from trading if results are found unsatisfactory.
This list also mostly includes entities supposed to be engaged in real estate, plantation, trading and finance related businesses.