Sebi issues cease and desist order against Bajaj Consultants

Cracking the whip, capital market watchdog Securities and Exchange Board of India (Sebi) today directed Bajaj Consultants and its group entities to "cease and desist from bidding in an objectionable manner" while scrutinising its role in the Vaswani industries share case.

"I cannot but prima facie hold that the bidding by Bajaj consultants Private Limited and its group entities in the IPO of the company (Vaswani Industries) was not in the bonafide interest of the genuine investors in the securities market", Sebi member Dr KM Abraham said in the order.

The order directed Bajaj Consultants and its group entities, alongwith two individuals Rajkamal Ramniwas Bajaj and Vinodkumar Ramniwas Bajaj, to cease and desist from bidding in an objectionable manner till further directions.

The order was issued following a probe into the role played by Bajaj Consultants and its group entities, which had applied for around 4,300,000 shares or 43% of the IPO issue size in the non-institutional investor (NII) category.

However, all such bids, made on the last day of the bidding period, were rejected during the allotment due to reasons like uncashed cheques supporting such applications or stop payment instructions.

During the course of investigation, Bajaj Consultants stated that it had withdrawn its bids based on information from the BRLM (Book Running Lead Manager, Ashika Capital) that the QIB portion was undersubscribed and that the same information was available on the stock exchange websites.

A Qualified Institutional Buyer (QIB) is a purchaser of securities deemed financially sophisticated and is legally recognised by security market regulators to need less protection from issuers than most public investors.

"This submission cannot be accepted on the face of it as it is revealed that there has not been any significant increase in the levels of QIB subscription between the closure of second day and the closure of the last day of the bidding period," Sebi said.

Therefore, Bajaj consultants Private Limited and its group entities clearly had the knowledge about the poor response to the QIB subscriptions at the time of their bidding, the market regulator added.

Sebi also directed Vaswani Industries to give withdrawal option to all the investors who have been allotted shares in the NII category and the retail individual investors' category for such number of shares by which the allotment ratio was impacted due to withdrawals or rejections.