Sebi bars 7 firms from issuing fresh shares

Market regulator the Securities and Exchange Board of India (Sebi) today barred seven companies, including Asahi Infrastructure & Projects and K Sera Sera, from issuing any fresh shares or altering their capital structure in a matter relating to manipulation of GDR issues.

"...In order to protect the interest of investors and the integrity of the securities market...Direct following companies not to issue equity shares or any other instrument convertible into equity shares or alter their capital structure in any manner till further directions in this regard," the Sebi said in an order.

Besides Asahi Infrastructure & Projects and K Sera Sera, the other companies are IKF Technologies, Avon Corporation, CAT Technologies, Maars Software International and Cals Refineries.

The Sebi also barred 10 other persons and entities from dealing in securities or instruments for involvement in the matter.

They are India Focus Cardinal Fund, MAVI Investment, KII Ltd, Sophia Growth, European American Investment Bank Ag, Basmati Securities, Oudh Finance & Investment, Alka India, SV Enterprises and JMP Securities.

The regulator has also directed the National Securities Depository and Central Depository Services (India) to "freeze the beneficial owner accounts" of the ten persons or entities.

"Further, the concerned stock exchanges should also ensure that said persons/entities do not take fresh positions or increase their open positions," it said.

The Sebi had in 2009-10 received alerts regarding large scale off-market transactions in its IMSS system regarding a few scrips like IKF Technologies, Avon Corporation, Asahi Infrastructure and K Sera Sera.

The companies had issued the GDRs, a financial instrument used by private markets to raise capital denominated in either dollars or euros, between 2007 to 2009.

"A preliminary examination revealed that FIIs like India Focus Cardinal Fund and Mavi Investment Fund, were converting the GDRs held by them into normal shares [known as cancelling GDRs] to sell in Indian markets."

"It was also observed that most cancellations were happening within a short period from the issue of the GDRs by the company," it said.

It was observed that between 33% and 75% of the shares sold by these FIIs in various scrips were bought by recurring clients. In view of such large scale selling by the FIIs and its matching with these clients, a detailed examination was carried out in these scrips.