Sebi warns merchant banker in Ram Kaashyap rights issue case

Sebi today said that Vivro Financial Services was found to be non-compliant with regulator's norms in a case related to rights issue of Ram Kaashyap Investment, and asked the entity to be cautious in the conduct of its merchant banking activities in future.

Vivro Financial was the lead manager handling the rights issue of the company.

The Securities and Exchange Board of India (Sebi), in its order, warned "Vivro Financial Services, a merchant banker to be careful and cautious in the conduct of its merchant banking activity and to adhere to and comply with all the statutory provisions while carrying out its activities in the securities market."

Sebi said that the merchant banker is neither connected with Knack Corporate Service, registrar of the rights issue, nor with the company or its promoters/directors. Besides, the lead manger has not connived or colluded with the company or its promoters/directors and Knack in their fraudulent, deceitful and manipulative scheme.

However, the merchant banker has been found to be non-compliant with regard to "non-exercise of due diligence with regard to the content of advertisement relating to dispatch of Composite Application Forms (CAFs)" along with the abridged letters of offer (ALoFs) to the eligible shareholders of the company.

Sebi said it found "the noticee (Vivro Financial) committed lapse and while discharging its role... It did not exercise due diligence and independent professional judgement required from relevant section of the ICDR Regulations."

Considering these facts and circumstances, the market regulator said: "...That warning to the noticee would be commensurate with the nature of default found in this case."

Ram Kaashyap Investment Ltd came out with its rights issue of 3.51 crore equity shares of Rs 10 each for cash at price aggregating to Rs 35.16 crore.