Freeze order escalates: Sebi locks Mehul Choksi’s accounts to recover Rs 2.1 crore; insider trading case triggered crackdown

In a bid to enforce a penalty issued over insider trading violations, Sebi has initiated recovery proceedings against fugitive businessman Mehul Choksi by freezing his financial assets, including bank, demat, and mutual fund accounts.The markets regulator issued attachment instructions on June 4 after Choksi failed to clear dues worth Rs 2.1 crore, despite a demand notice served on May 15. The dues stem from a January 2022 Sebi order that found Choksi guilty of sharing unpublished price-sensitive information in connection with trading in Gitanjali Gems shares.According to PTI, Choksi had been warned of asset seizure if the amount wasn’t paid within 15 days.

The outstanding sum includes a Rs 1.5 crore fine and Rs 60 lakh in interest.Choksi, who was then the chairman, managing director, and part of the promoter group of Gitanjali Gems, is currently facing extradition proceedings after being arrested in Belgium earlier this year. He had been residing in Antigua since fleeing India in 2018 following the Punjab National Bank (PNB) loan fraud, which allegedly involved over Rs 14,000 crore.

Nirav Modi, his nephew, is also a key accused in the case and is jailed in the UK.Sebi's attachment order directed banks, depositories CDSL and NSDL, and mutual funds to prohibit any debits from Choksi's accounts, while allowing credits. Lockers and all associated accounts have also been brought under attachment. The regulator said it acted to prevent any delay or obstruction in realising the dues.In its earlier order, Sebi had found that Choksi passed sensitive company information to Rakesh Girdharlal Gajera, who offloaded his 5.75% stake in Gitanjali Gems in December 2017 to avoid losses ahead of the public fallout from fraudulent letters of undertaking (LoUs) issued by Gitanjali Group-linked entities.“Noticee no. 1 (Choksi) was found to have communicated UPSI to Noticee no. 2 (Gajera) without any underlying legal obligation or any legitimate purpose,” the Sebi order stated.The regulator had barred Choksi from the securities market for one year and declared that both he and Gajera had violated insider trading norms under the Prohibition of Insider Trading (PIT) rules.In a separate matter, Sebi had also issued a notice in May 2023 directing Choksi to pay Rs 5.35 crore over fraudulent trading practices involving Gitanjali Gems.