Sebi fines 6 entities Rs 1.2 cr for IPO fund diversion, fraudulent trading

Sebi on Thursday slapped a total fine of Rs 1.2 crore on six entities for diverting proceeds from the initial public offer of Birla Pacific Medspa Ltd (BPML) as well as for indulging in manipulative trading.

A fine of Rs 20 lakh each has been imposed on Jalan Cement Works Ltd (now known as Aashrit Capital Ltd), Orbit Financial Consultants Pvt Ltd, Rupak Trading Pvt Ltd, Marutinandan Infosolutions Pvt Ltd, Sanjukta Vanijya Pvt Ltd and Darshan Tradelink Pvt Ltd.

The regulator conducted a probe into the IPO of BPML for the period July 7 to July 15, 2011.

The shares of BPML were listed on BSE on July 7, 2011. The IPO was open for subscription from June 20- 23, 2011.

It was found that the price of the scrip had seen sharp volatility on the listing day, closing at Rs 25.35 -- 154 per cent more than issue price of Rs 10 per share.

Further, the regulator noted that IPO proceeds of BPML were routed through Sanjukta and Darshan to four entities -- Orbit, Maruti, Jalan and Rupak, which ultimately used the money for purchasing the company's shares on the day of listing.

They together bought around 21 per cent of the total deliverable quantity and this gave an impression to other buyers that there is genuine demand for the shares in the market. Further, it helped in maintaining price of the share of BPML on the day of listing, Sebi said in an order.

According to the regulator, the pattern of transfer of funds makes it very clear that the six entities (noticees) along with the BPML had made a scheme to transfer funds to support the company's share price by creating false buying pressure in its scrip on the listing day.

"I conclude that noticees were an integral part of the deceptive and fraudulent scheme by acting as conduits for manipulating the shares of BPCL wherein IPO funds of BPML were routed through noticees for buying its own shares," Sebi's Adjudicating Officer B J Dilip said in the order.

The entities were found to have violated the provisions of Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.

Separately, Sebi on Thursday imposed a total fine of Rs 14 lakh on three individuals for disclosure lapses while dealing in the shares of Geodesic Ltd.

A fine of Rs 6 lakh each has been imposed on Kiran Kulkarni and Pankaj Kumar. Besides, a Rs 2 lakh fine has been slapped on Veena Pankaj Kumar.

A Sebi probe found that the individuals had failed to make disclosures with respect to the change in their shareholdings reaching beyond the threshold limit.

In another order, the watchdog slapped a fine of Rs 7 lakh on Dharmendra Bhojak for disclosure lapses related to change in his shareholding in the scrip of Kanchan International Ltd.