Sebi imposes Rs 500,000 fine on Anand Rathi in 2011 Datsons IPO case

Markets regulator Sebi on Tuesday imposed a fine of Rs 500,000 on merchant banker Anand Rathi Advisors for not making disclosure about advancement of loan by a group firm, in the IPO documents of Dr Datsons Labs.

The Securities and Exchange Board of India (Sebi) conducted an investigation in the matter of initial public offer (IPO) by Datsons (formerly known as Aanjaneya Lifecare) during the period of May-June 2011 to ascertain any possible violation regulations.

The company came out with an initial share-sale in May 2011 to raise Rs 1.17 billion.

Pursuant to investigation, Sebi found that ARSBL, a group company of Datsons on March 31, 2011 had advanced Rs 20 millinter-corporaterporate deposits (ICD) to the issuer company, which was later repaid from the IPO proceeds on May 26, 2011.

Anand Rathi, which was one of merchant banker, had failed to make disclosure of advancement of loan by ARSBL to Datsons in the IPO document, the regulator noted.

"The failure of the noticee (Anand Rathi) on its part in ascertaining the advancement of loans by its group company, which was a material information, was not disclosed in the offer document in respect of IPO by Datsons and therefore the conduct of the noticee cannot be viewed leniently," Sebi said.

Lapses on the part of Anand Rathi is in violation of code of conduct for merchant bankers and accordingly, the regulator has imposed a fine of Rs 5 lakh on it.