You are here: Home » Markets » News
Business Standard

Sebi fines 6 entities Rs 1.2 cr for IPO fund diversion, fraudulent trading

The regulator conducted a probe into the IPO of BPML for the period July 7 to July 15, 2011


Press Trust of India  |  New Delhi 


on Thursday slapped a total fine of Rs 1.2 crore on six entities for diverting proceeds from the initial public offer of Birla Pacific Medspa Ltd (BPML) as well as for indulging in manipulative trading.

A fine of Rs 20 lakh each has been imposed on Jalan Cement Works Ltd (now known as Aashrit Capital Ltd), Orbit Financial Consultants Pvt Ltd, Rupak Trading Pvt Ltd, Marutinandan Infosolutions Pvt Ltd, Sanjukta Vanijya Pvt Ltd and Darshan Tradelink Pvt Ltd.

The regulator conducted a probe into the IPO of BPML for the period July 7 to July 15, 2011.

The shares of BPML were listed on BSE on July 7, 2011. The IPO was open for subscription from June 20- 23, 2011.

It was found that the price of the scrip had seen sharp volatility on the listing day, closing at Rs 25.35 -- 154 per cent more than issue price of Rs 10 per share.

Further, the regulator noted that IPO proceeds of BPML were routed through Sanjukta and Darshan to four entities -- Orbit, Maruti, Jalan and Rupak, which ultimately used the money for purchasing the company's shares on the day of listing.

They together bought around 21 per cent of the total deliverable quantity and this gave an impression to other buyers that there is genuine demand for the shares in the market. Further, it helped in maintaining price of the share of BPML on the day of listing, said in an order.

According to the regulator, the pattern of transfer of funds makes it very clear that the six entities (noticees) along with the BPML had made a scheme to transfer funds to support the company's share price by creating false buying pressure in its scrip on the listing day.

"I conclude that noticees were an integral part of the deceptive and fraudulent scheme by acting as conduits for manipulating the shares of BPCL wherein IPO funds of BPML were routed through noticees for buying its own shares," Sebi's Adjudicating Officer B J Dilip said in the order.

The entities were found to have violated the provisions of Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.

Separately, on Thursday imposed a total fine of Rs 14 lakh on three individuals for disclosure lapses while dealing in the shares of Geodesic Ltd.

A fine of Rs 6 lakh each has been imposed on Kiran Kulkarni and Pankaj Kumar. Besides, a Rs 2 lakh fine has been slapped on Veena Pankaj Kumar.

A Sebi probe found that the individuals had failed to make disclosures with respect to the change in their shareholdings reaching beyond the threshold limit.

In another order, the watchdog slapped a fine of Rs 7 lakh on Dharmendra Bhojak for disclosure lapses related to change in his shareholding in the scrip of Kanchan International Ltd.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, February 04 2021. 22:41 IST