IPO scam: Sebi slaps Rs 36-crore penalty on six

The Securities and Exchange Board of India (Sebi) has directed Roopalben Panchal and five others to disgorge a total of Rs 36.09 crore after its probe in the IPO irregularities scam.

If they fail to disgorge the money within 45 days, they would be barred from the securities market for nine years. This is the first significant order to be issued after U K Sinha became chairman of the regulatory body.

In an order issued today by whole-time member M S Sahoo, the regulator has barred Roopalben Panchal, Devangi Panchal, Dipak Panchal, Hina Panchal, Bhargav Panchal and Arjav Panchal from the securities market for three months and has also frozen the securities in their respective demat accounts.

The monetary penalty includes the unlawful gains made by them and a simple interest of 10 per cent per annum for five years (2005-2010) on the unlawful gains.

According to Sebi, these entities employed fraudulent, deceptive and manipulative practices to corner shares meant for retail investors in 18 initial public offers (IPOs) and made unlawful gains by selling these.

They were already barred from dealing in securities through an interim order issued in 2006. Sebi investigations revealed that these entities opened thousands of demat accounts in fictitious names and engineered applications in the retail category of several IPOs through these accounts.

In another matter, Sebi imposed a penalty of Rs 25 lakh on Central Bank of India for violation of regulations on debenture trustees.