SEBI Freezes Mehul Choksi’s Assets to Recover ₹2.1 Crore in Insider Trading Penalty
Market regulator intensifies action on fugitive PNB scam accused, directs banks and mutual funds to attach domestic holdings
Mumbai | June 6, 2025: The Securities and Exchange Board of India (SEBI) has begun attaching assets belonging to Mehul Choksi, the fugitive diamond businessman at the center of India’s largest banking fraud, in a renewed effort to recover ₹2.10 crore in dues stemming from a long-standing insider trading case.
According to an official update reported by ANI on Thursday, SEBI has issued notices to several Indian banks and mutual fund houses, instructing them to freeze Choksi’s accounts and block any withdrawals or transactions. The step follows a lapse in compliance after a 15-day payment notice served to Choksi on May 15 went unanswered.
The ₹2.1 crore claim includes a ₹1.5 crore fine for insider trading violations tied to Gitanjali Gems, a company Choksi once helmed, along with interest charges of ₹60 lakh accrued over three years and a nominal ₹1,000 in recovery costs.
SEBI Draws the Line
In a letter addressed to financial institutions, SEBI laid out its case plainly: there is enough reason to believe Choksi may attempt to quietly dispose of remaining Indian assets unless immediate action is taken.
The tone of the directive was urgent. SEBI urged banks to not only freeze all active accounts but also submit detailed information, including locker contents and bank statements from the past year. Mutual fund companies were issued similar instructions, tasked with tracking and attaching any demat accounts or folios linked to Choksi.
“There’s a very real risk of asset flight here,” a senior official familiar with the matter said on condition of anonymity. “When someone is beyond the legal reach of the courts, regulatory muscle is all that remains.”
A Story That Never Quite Left the Headlines
Mehul Choksi’s name still echoes across India’s corporate corridors, years after he vanished into the Caribbean night. Once the face of a glitzy diamond empire, Choksi fled the country in January 2018, just days before the ₹14,000 crore Punjab National Bank (PNB) scam erupted in public view.
The fraud, orchestrated through fraudulent Letters of Undertaking and abetted by insiders at the bank, sent shockwaves through India’s financial sector. It took months for investigators to piece together the magnitude of the deceit, and even longer for regulators to trace the international money trail.
Choksi was later discovered in Antigua and Barbuda, where he acquired citizenship and resisted extradition. But the chase never slowed. Earlier this year, in April, he was detained in Belgium following a request from Indian authorities. His bail plea was denied, a rare win for Indian enforcement agencies operating across borders.
Why This Action Matters — Even If the Amount Seems Small
On paper, the ₹2.1 crore being recovered by SEBI may pale in comparison to the billions lost in the broader PNB fraud. But symbolism carries weight in regulatory enforcement.
This is not just about numbers. It’s about the rulebook catching up to those who once believed they were too far gone to be touched.
Market veterans say that in cases involving fugitives, regulatory actions often work in layers—a steady tightening of the net, one attachment order at a time.
“This isn’t just about recovering money. It’s about saying: you can’t run forever,” remarked a Mumbai-based compliance officer at a major asset management company, speaking informally. “Each frozen account is a reminder that impunity has limits.”
The Insider Trading Angle
While most remember Choksi for his role in the PNB scandal, the case at hand is different. This time, the focus is on violations of insider trading norms, specifically trades in Gitanjali Gems made on the basis of unpublished price-sensitive information.
The SEBI ruling from 2022 concluded that such trades were in breach of the SEBI (Prohibition of Insider Trading) Regulations, 2015. The ₹1.5 crore fine was part of a broader clean-up attempt in the wake of the PNB affair, but it took over two years and several rounds of correspondence before enforcement could begin.
Now, with no voluntary payment forthcoming, the regulator has moved to extract what it can through the legal levers available.
Financial Institutions in Compliance Mode
Banks and mutual funds are now under pressure to respond quickly. SEBI’s letter leaves little room for discretion. All institutions have been asked to confirm attachment of accounts and submit supporting documents without delay.
“Most of us expected this. It’s part of the larger puzzle,” said an executive at a private sector bank, who added that his team had already begun flagging relevant accounts. “Even if it’s a procedural exercise, it’s one that has to be done right.”
The instructions, while specific, also hint at broader cooperation between regulators and financial custodians. The message: if someone has used the Indian system to their advantage in the past, the same system will now be used to hold them accountable.
The Road Ahead
Choksi’s legal troubles are far from over. While the Belgian court’s decision to deny bail marks a key milestone, extradition remains a separate legal battle — one likely to stretch across jurisdictions and months.
In the meantime, SEBI’s actions serve as a reminder that justice, however delayed, is still being pursued at home.
As one regulatory official put it, “You can fight in foreign courts. But back here, your name still carries weight. And your accounts, no matter how small, will not go untouched.”
Source: ANI
Stay updated with the latest from Hindustan Herald, your trusted source for Politics, Business, Sports, Entertainment, Lifestyle, Breaking News, and More.
📲 Follow us on Facebook, Instagram, Twitter, LinkedIn, and YouTube, 🔔 Join our Telegram channel @hindustanherald
Neha Bhardwaj is a Reporting Fellow at Hindustan Herald, focusing daily on insightful stories from the business and finance sectors. Currently pursuing her studies at Symbiosis, Pune, Neha brings a keen understanding of economic landscapes and corporate strategies to her reporting. Her articles aim to demystify complex financial topics and keep our audience informed on the forces shaping the economy.
- Neha B.https://hindustanherald.com/authors/neha_b/
