Sebi slaps Rs 2.50 cr fine on Amadhi Investments in IPO case

Capital market regulator Sebi today slapped a penalty of Rs 2.50 crore on Amadhi Investments for indulging in fraudulent and manipulative activities in the initial public offerings (IPO) of three companies, including IDFC and Sasken Communication Technologies.
The Securities and Exchange Board of India (Sebi) has found that Amadhi Investments financed one Sugandh Estates and Investments in the IPOs of IDFC, Sasken and FCS Software Solutions with the purpose of cornering shares reserved for retail investors.
The IPOs were issued between 2003 and 2005.
" ... The noticee (Amadhi Investments) had indulged in fraudulent and manipulative activities and employed deceptive devices and scheme to corner the shares reserved for retail individual investors in the IPOs of IDFC Ltd, Sasken Communication Technologies Ltd and FCS Software Solutions Ltd," Sebi adjudicating officer D Ravi Kumar said in an order today.

Sebi also noted that "the nefarious design" adopted by Amadhi Investments in cornering the shares had deprived retail investors of opportunity of getting allotment in the IPOs.
Accordingly, the regulator has imposed "a penalty of Rs 2.50 crore on Amadhi Investments Ltd" for violation of Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations 2003, the ordern said.

Probe conducted by Sebi had found that certain entities referred by the watchdog as 'key operators' had opened large number of demat accounts and bank accounts which were in the names of benami persons and had acquired shares of various companies in the IPOs by making applications under such fictitious names under the retail category.

Further, it was noted that subsequent to the allotment of shares in IPOs, these scrips were transferred from the demat accounts of the fictitious allottees in the demat account of key operators before the shares were listed on the bourses.
The key operators then transferred the shares through off market deals to certain entities referred to by Sebi as the "financiers".
Amadhi Investments was found to be one of the entities that acted as a "financier" in the scheme of cornering of shares in certain IPOs.