Sebi orders forensic audit of Svam Software amid crackdown on shell cos

Markets regulator Sebi has ordered a forensic audit of Svam Software, which figures among 331 suspected shell companies, after finding prima facie evidence of misrepresentation of financials by the firm.

While calling for the forensic audit, the Securities and Exchange Board of India (Sebi) has lifted the trading restrictions imposed on the firm.

"In view of the prima facie evidence on the misrepresentation of financials by the company as well as suspicion of misuse of funds/ books of accounts of the company, the persons who are in control of the company and the directors/promoters of the company are prima facie liable for action by Sebi...," the regulator said in an interim order dated November 27.

The regulator has directed BSE to appoint an independent forensic auditor to verify any misrepresentation of financials and business by Svam Software Ltd (SSL) as well as any misuse of the books of accounts or funds.

"The trading in securities of SSL shall be reverted to the status as it stood prior to issuance of a letter dated August 7, 2017 by Sebi," the regulator said.

SSL is among the firms against whom Sebi initiated action on August 7 by ordering trading restrictions, following receipt of a list of 331 'suspected shell companies' from the government.

The ordered trade restrictions - allowing trade only once a month and that too for only buy transactions with a 200 per cent security deposit - were revoked in some cases a few days later following appeals filed by them with the Securities Appellate Tribunal, but Sebi was asked to continue with its probe and pass its orders expeditiously.

The firm has been given 30 days time to file its reply to the interim order.