Sebi bars merchant banker for 5 years in Brooks IPO case

Capital markets regulator Sebi today barred merchant banker D&A Financial Services for five years from taking up new assignments or be involved in fresh public offers for not complying with disclosure norms related to IPO documents of Brooks Laboratories.
The Securities and Exchange Board of India (Sebi) said the five year prohibition would take into account the period of restraint already undergone by the merchant banker, pursuant to the interim order dated December 28, 2011.
The period of prohibition would start after 21 days from today, it added.
The merchant had "utterly failed in exercising due diligence and satisfying itself about the different aspects of the issue, including the veracity and adequacy of the disclosures made by Brooks and issued due diligence certificates based on the unverified data and hence violated ... The Merchant Bankers Regulations, 1992", Sebi said in its final order against D&A Financial Services today.

Accordingly, Sebi said it is prohibiting "the noticee viz. D&A Financial Services from taking up new assignment or involvement in any new issue of capital, including an IPO, follow on issue etc, from the securities market in any manner whatsoever for a period of five years".
Further, the market regulator has directed the merchant banker "not to take up any assignment or involvement" in buy-back and delisting of securities for five years.

Sebi had initiated an investigation into the alleged irregularities in the IPO of Brooks for the period - June 2011 to September 2011.
The probe found suppression of certain material facts as well as misinformation in the IPO prospectus of Brooks.

Among others, Brooks' board of directors passed certain resolutions to raise funds through Inter Corporate Deposits which was not disclosed by the company.
D&A Financial Services had failed to exercise due diligence in respect of disclosure of such information and was barred by an interim order in December 2011 from taking up new assignments or be involved in new public offers.
"The period of prohibition already undergone by the noticee pursuant to the interim order dated December 28, 2011, shall be taken into account for the purpose of computing the period of prohibition imposed in this order," Sebi said in its latest order.