sebi:ID-4/AO/DRK/675-680/01-05/2015
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Penalty imposed on Brooks Laboratories Ltd. for violations of PFUTP Regulations and SEBI Act provisions
Provisions invoked
- s. 15
- s. 12
- s. 15J
Regulations
- Reg. 3
- Reg. 4
- Reg. 4(1)
- Reg. 47
- Reg. 60
- Reg. 55
- Reg. 57(1)
- Reg. 57(2)(a)
- Reg. 2
- Reg. 57(2)
Parties
- Brooks Laboratories Ltd.
- Noticee No. 1
- Noticee No. 4 (Dr. D S Maity)
Holding
Brooks Laboratories Ltd. was held liable for violating regulations 3(b), (c) and (d) and regulations 4(1) and 4(2)(f) of PFUTP Regulations read with section 12A(a), (b) & (c) of the SEBI Act, and a monetary penalty of Rs. 50 lakh was imposed under section 15 HA of the SEBI Act.
Full text
Page 2 of 40 APPOINTMENT OF ADJUDICATING OFFICER 2. Subsequent to the transfer of erstwhile Adjudicating Officer, the undersigned was appointed as Adjudicating Officer vide order dated July 30, 2013, under Section 15-I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the 'SEBI Act') read with Rule 3 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as the 'Adjudication Rules') to inquire into and adjudge under sections 15 HA and 15 HB of the SEBI Act, the violation of the provisions of sections 12 A(a), (b) and (c) of SEBI Act read with regulations 3 (a), (b), (c) and (d) and regulations 4(1), 4(2) (d), (e), (f) and (k) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP Regulations’), regulations 57(1), 60(4)(a), 60(7)(a) and Clauses 2 (VII) (G), 2 (XVI) (B) (2) of Part A of Schedule VIII read with regulation 57(2)(a) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (hereinafter referred to as ‘ICDR Regulations’) alleged to have been committed by the Noticees.
Page 3 of 40 in the form of Inter Corporate Deposits (ICDs) from some of the entities / lenders (as shown in table /charts at para 4-5 of the SCN) in order to fund its capital expenditure without the presence of independent directors. As per the information available on the website of the Ministry of Corporate Affairs (MCA), some of the entities / lenders from whom ICDs were raised, were connected / related to each other. Copy of MCA website showing the inter-se relation / connection of directors of said entities was provided to the Noticees along with SCN.
Page 4 of 40 Suruamukhi by Brooks, was to round trip the funds as mentioned in Para above. H. Out of said IPO proceeds, ` 2.50 crores was transferred by Brooks to Overall Financial Consultants Pvt. Ltd. (Overall Financial) through layers of several entities (as shown in diagram at para 11 of the SCN) which was ultimately utilized by Overall Financial to trade in the scrip of Brooks and simultaneously made losses which were adjusted through the IPO proceeds. By transferring such funds, Brooks allegedly participated in fraudulent exercise whilst dealings in the securities. Copy of Bank Statements showing the transfer of funds by Noticee No. 1 to Overall through layers of entities, were provided to the Noticees along with SCN as Annexure VII.
You have read the preview. Create a free account to read the full order, track this party, and analyse it in Ontology.
Free accounts include 10 searches/day with full order access.
Source: SecMarx — sebi:ID-4/AO/DRK/675-680/01-05/2015. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.