Sebi slaps Rs 11.80 cr penalty on Brooks Labs and 5 executives

Capital markets regulator Sebi today imposed a penalty of Rs 11.80 crore on Brooks Laboratories and its five top executives for fraudulent activities including "round tripping of funds" from the company's IPO proceeds.
Securities and Exchange Board of India (Sebi) has imposed the fine on Brooks Laboratories, the company chairman Atul Ranchal, Managing Director Rajesh Mahajan, CEO Durga Shankar Maity, Chief Financial Officer Ketan Shah and Company Secretary Parvinder Kaur.
According to Sebi, the company and its senior officials had indulged in "acts of round tripping of funds / siphoning off funds from the IPO proceeds, mis-utilisation of IPO proceeds coupled with non disclosures and wrong disclosure in the Offer Document".

It also noted that the entities had not disclosed "material information" with respect to availing Inter Corporate Deposits (ICDs) to the tune of Rs 30.40 crores, among others, in the IPO offer document.
Accordingly, Sebi in a ruling today said "a consolidated penalty of Rs 11.80 Crores is imposed upon all noticees".
Sebi had conducted a probe into alleged irregularities in the Initial Public Offer (IPO) of Brooks Laboratories covering the period from June 2011 to September 2011.
The investigation found that the company and its top executives along with several other entities had indulged into fraudulent exercise including round tripping of funds to the tune of Rs 8 crore from the IPO proceeds.

"Such fraudulent practices of siphoning off funds and the non-disclosure or concealment of material information... Were misleading in nature and can influence the decision of investors while making investment in the IPO of Brooks," the capital market regulator said.