Sebi bars four individuals in Birla Cotsyn’s GDR issue manipulation case

Markets regulator Sebi has barred four individuals in reference to manipulation in the issuance of worldwide depository receipts by Birla Cotsyn (India) Ltd again in 2010.

Currently, Birla Cotsyn (India) Ltd (BCIL) is dealing with liquidation proceedings below the Insolvency and Bankruptcy Code.

In a 55-page order handed on Tuesday, Sebi banned four former individuals — P V R Murthy, Yashovardhan Birla, Y P Trivedi and Mohandas Adige — who have been related to the corporate.

While a three-year ban has been imposed on Murthy, Birla will face a ban for 2 years. Trivedi and Adige have been barred from the securities market for one yr every.

In September 2019, the National Company Law Tribunal (NCLT) ordered the graduation of liquidation of BCIL below the Insolvency and Bankruptcy Code.

Against this backdrop, Sebi mentioned current the current proceedings initiated in opposition to the corporate stands disposed of.

“However, in the event that the order for liquidation passed by the NCLT is reversed in appeal, the noticee No. 1 (BCIL) shall be restrained from accessing the securities market…” for 3 years from the date of such reversal of liquidation order, the watchdog famous.

Sebi had carried out an investigation into the issuance of Global Depository Receipts (GDRs) by varied firms, together with BCIL.

In March 2010, BCIL issued 9.69 million GDRs value USD 24.99 million.

It was discovered that Vintage was the one entity that subscribed to the GDRs and the subscription quantity was paid by acquiring a mortgage from EURAM (European American Investment Bank), as per the order.

BCIL supplied safety in the direction of the mortgage obtained by Vintage by a pledge settlement signed between BCIL and EURAM Bank in February 2010. Under the pact, BCIL pledged GDR proceeds in opposition to the mortgage availed by Vintage for subscription of its GDRs, in accordance with Sebi.

Further, the regulator mentioned the pledge settlement was signed by Murthy, then a director of BCIL who was authorised by a board decision in December 2009. The firm had additionally authorized opening of a checking account with EURAM Bank for the aim of receiving the GDR proceeds.

Birla, Trivedi and Adige had additionally attended that board assembly, as per the regulator.

The three individuals have been additionally administrators throughout the interval when the company announcement have been made by BCIL, which have been false and deceptive to the extent that its GDR issue was efficiently allotted whereas the identical was subscribed by solely Vintage, in accordance with Sebi.

The regulator famous that the announcement conveys that there was appreciable demand for its GDRs in the abroad market and the identical have been efficiently subscribed.

Thus, the traders in India have been made to imagine that BCIL has acquired a superb popularity in phrases of funding potential and, due to this fact, overseas traders have efficiently subscribed to the GDR issue, it added.

The watchdog additionally mentioned the act of BCIL in making deceptive bulletins concerning its GDR issue resulted in fraud below the prohibition of fraudulent and unfair commerce practices.

(Only the headline and film of this report could have been reworked by the Business Standard workers; the remainder of the content material is auto-generated from a syndicated feed.)

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