GDR manipulation: Sebi levies Rs 10.5 cr fine on Nissan Copper, officials

Regulator Sebi on Thursday slapped a total fine of Rs 10.5 crore on Nissan Copper Ltd and its senior officials in a matter related to manipulation in issuance of global depository receipts (GDR).

The officials are the firm's Managing Director Ratanlal Mardia and directors Atul Mardia and Praveen Kumar Shah.

Sebi conducted an investigation between May 2010 and June 2010 into the GDR issued by the firm.

It noted that the company had issued 5 million GDRs worth USD 22.40 million on May 20, 2010.

The investigation revealed that the entire 5 million GDRs were subscribed by only one entity, Vintage FZE, presently known as Alta Vista International FZE, on obtaining a loan from European American Investment Bank AG (EURAM Bank).

The company acted as guarantor and deposited the entire GDR proceeds received from Vintage FZE with EURAM Bank as security against the loan for subscribing to the GDRs issued by the company.

The company also failed to make requisite disclosures pertaining to the GDR issue.

The firm made false and misleading corporate announcements and also suppressed material and price sensitive information pertaining to execution of pledge agreement by the firm in favour of Euram Bank pledging the GDR proceeds for providing security to the loan taken by Vintage.

Among other disclosure lapses, it also failed to disclose that Vintage was the only subscriber of the GDR issue.

The firm also failed to disclose contingent liability to the extent of Rs 1.10 crore in its financial statements for the financial year 2010-11.

Sebi said the scheme of arrangement in allotting GDR issue to only one entity, Vintage, which subscribed to the issue by obtaining loan from Euram Bank and which was secured by pledging its GDR proceeds and the false and misleading corporate announcements lead to the conclusion that this was "done in a fraudulent manner with a view to influence the decision of the investors and to induce the sale or purchase of its scrip."