Paisalo Digital settles disclosure lapse case with Sebi, pays Rs 16 lakh

Paisalo Digital has settled a case related to alleged shareholding disclosure lapses with Sebi after it paid over Rs 16 lakh towards settlement charges.

In a settlement order passed on Thursday, Sebi said it disposes of the adjudication proceedings against the applicant -- S E Investments Ltd (now known as Paisalo Digital Ltd).

The market watchdog, which initiated the proceedings in December 2017, found that a promoter of Varun Industries Ltd (VIL) had borrowed money from Paisalo and the promoter pledged his 5.62 per cent in VIL to Paisalo in February 2012.

However, Paisalo failed to make requisite disclosures to the exchanges as well as to VIL since the percentage of encumbered shares crossed a certain threshold.

Besides, due to default of payments by the promoter, Paisalo invoked the pledged shares which resulted in the change of its shareholding in VIL.

However, it allegedly failed to disclose to VIL and exchange regarding the change in shareholding under PIT (Prohibition of Insider Trading) and SAST regulations, the regulator said.

While the proceedings were pending, Paisalo submitted a plea under settlement mechanism wherein an entity is allowed to settle charges by paying a penalty without admission or denial of guilt.

Thereafter, the entity was called for an internal committee meeting in September 2018 wherein it was given an option of paying Rs 16.11 lakh as settlement charges or come through normal procedure.

The entity opted for settlement procedure and as required, paid the amount within a stipulated time.

Sebi further said enforcement actions, including commencing or reopening of the proceedings, could be initiated if any representation made by it is found to be untrue.