Capital markets regulator Sebi has imposed a penalty totalling Rs 10.9 crore on seven entities, together with Teledata Technology Solutions Ltd, in a case pertaining to irregularities in the issuance of Global Depository Receipts (GDRs) of the company.
Individually, Sebi levied a fine of Rs 10.1 crore on Teledata, Rs 20 lakh every on Okay Padmanabhan and Arun Panchariya and Rs 10 lakh every on N Sakthivel, M S Ramakrishnan, R Ravichandran and G Jagadish.
In its order handed on Tuesday, Sebi mentioned that Panchariya connived with the opposite six entities to structure the fraudulent challenge of GDRs whereby Teledata suffered a loss to the tune of USD 32.53 million.
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The Securities and Exchange Board of India (Sebi) performed an investigation into the alleged irregularities in the issuance of GDRs by Teledata through the interval from February 2010 to March 2010. The focus of investigation was to establish whether or not shares underlying GDRs had been issued with correct consideration and whether or not acceptable disclosures had been made by Teledata with respect to its GDRs.
In its probe, Sebi discovered that the scheme was designed to create an impression of receiving funds via GDR subscription. The whole challenge measurement was round 35,37,505 GDRs, via which capital amounting to USD 36.96 million was raised.
This unsuitable impression was aided by Teledata when it gave deceptive disclosures in regards to the subscribers to the difficulty and suppressed info concerning the pledge situations of the GDR proceeds pledged with Euram Bank.
The GDR subscription was structured in a way whereby Panchariya managed subscriber, Vintage, acquired the GDRs with out spending a penny via pledge of the GDRs and GDR proceeds towards the mortgage used for subscription.
“Thus, no funds actually flowed to the company i.e. Teledata until Vintage repaid the loans. While Vintage repaid part of the loan, and funds to that extent did flow to Teledata, Vintage defaulted in its loan obligation to the extent of USD 32.35 million. Hence, Teledata did not get equivalent funds against the equity it had issued, leading to a loss to shareholders of Teledata, whose valuations were diluted by the expanded equity capital,” Sebi famous.
Sebi mentioned these entities had been concerned in fraudulent and unfair commerce follow referring to securities market, thereby contravening the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) Regulations.