GDR manipulation: Sebi bars Aptech Ltd, its former MD from securities mkt

Markets regulator Sebi has restrained Aptech Ltd and its former managing director from accessing the securities market in a matter related to manipulation in issuance of Global Depository Receipts (GDRs).

While the firm has been barred for six months, its former managing director Pramod Khera has been banned from the securities market for five years.

Earlier, it was erroneously reported that Sebi has barred the Aptech MD.

Sebi investigated the issuance of GDR by the company for the period October-November 2003 and found that the firm had issued 38,40,000 GDRs amounting to USD 14.4 million in November 2003 on Luxembourg Stock Exchange.

Sebi noted that the entire GDRs were subscribed by only one entity, Willow Brooks S.A, after obtaining a loan from Banco Efisa, S.F.E., S.A.

Aptech had pledged its entire GDR proceeds with Banco Bank as a security against the loan availed by Willow for subscribing to GDRs. In this regard, Khera had signed an agreement with the bank. In addition, the company reported misleading news to the stock exchange which contained information in a distorted manner, as per Sebi investigation.

By doing so, the firm and its then managing director (Khera) violated Prohibition of Fraudulent and Unfair Trade norms.

In its 73-page order, dated April 1, Sebi also said the existing promoters have taken the control and management of Aptech in October 2005 and that the fraud was carried out in 2003 "during the period of erstwhile promoters".

The company and Khera have been restrained from accessing the securities market.

During the period of restraint, Khera cannot hold any position as director or key managerial personnel in any listed company and Sebi registered intermediary.

In a statement on Friday, Aptech said the GDR issue was undertaken in 2003 by the former management of the company under the erstwhile promoters.

"The present promoters had taken control and management of the company in October 2005... There is no observation or any adverse remark against the present management of the company or present office bearers or present promoters," it said.