Market regulator Sebi has barred nine people from trading in the securities market for a year for allegedly colluding to make a failed public issue "appear as successful", thereby denying refund to retail investors.
"They created circumstances in which the retail investors got trapped. Had the issue failed, the innocent retail investors at least would have got the refund of their subscription," the Sebi said in a order.
It said these nine people bought 53 per cent of the shares issued by Consortex Karl Doelitzsch (India), earlier known as Andhra Pradesh Power Tools. The issue opened for subscription on January 22, 1996 and closed on February 1, 1996.
"...If these 53 per cent shares were excluded from the public issue of Consortex, the issue would have deemed to be under subscribed and the entire subscription money was required to have been refunded by Consortex to the investors," the order said.
For a public issue to be successful, the statutory minimum subscription should be 90 per cent of the float.
The nine people barred for the fraud are: Nitin C Vora, Jyoti Vora, Bharat Kanakia, Sonal B Kanakia, Meena A Kanakia, Yogesh Parekh, Trupti Parekh, Chetana R Valia and Shilpa C Timbadia.
The Sebi said they separately entered into MoU with Volkskas Merchantile (VML), an associate company of Consortex, to buy 10 lakh shares each and "agreeing to hand over the share certificates on allotment and receiving the money back".
It said the share certificates were handed over to the representative of VML as per the agreed terms of MoU.
