sebi:Order/KS/VC/2020-21/7595
Facts / Headnote
Noticee held liable for fraud under Section 12A SEBI Act and PFUTP Regulations and penalty of Rs. 1,00,00,000 imposed under Section 15HA; no penalty imposed under Section 15A(a) for alleged furnishing of false information.
Provisions invoked
- s. 15A
- s. 15
- s. 19
- s. 12A
- s. 15H
- s. 27
- s. 15J
- s. 11C(6)
- s. 11C(3)
- s. 28A
- s. 2(26)
- s. 27(1)
- s. 77(2)
- s. 2(54)
- s. 376
- s. 29
- s. 2(60)
Regulations relied on
- SEBI (PFUTP) Regulations, 2003 — 3(b)
- SEBI (PFUTP) Regulations, 2003 — 3(c)
- SEBI (PFUTP) Regulations, 2003 — 3(d)
- SEBI (PFUTP) Regulations, 2003 — 4(2)(c)
- SEBI (PFUTP) Regulations, 2003 — 4(2)(f)
- SEBI (PFUTP) Regulations, 2003 — 4(2)(k)
- SEBI (PFUTP) Regulations, 2003 — 4(2)(r)
Parties
- Mr. Pankaj Saraiya
Holding
The Noticee, as promoter/Managing Director of Avon, is liable for fraudulent GDR issuance in collusion with Arun Panchariya/Vintage in violation of Section 12A(a),(b),(c) read with Regulations 3(b),(c),(d) and 4(2)(c),(f),(k),(r) of PFUTP Regulations and is penalized Rs. 1 crore under Section 15HA; the charge of furnishing false information under Section 11C(3) read with 11C(6) punishable under Section 15A(a) is not sustainable.
Full text
Page 2 of 61 also observed that one Mr. Arun Panchariya (hereinafter referred to as ‘AP’) was the founder, director as well as 100% shareholder of Pan Asia. It is alleged in the Investigation Report (IR) that the complete process of GDR issuance by Avon was devised and structured by AP in connivance with Avon to the detriment of the Indian investors wherein AP arranged for loans for the subscription of GDRs of Avon by Vintage FZE (hereinafter referred to as ‘Vintage’), another company wherein AP was Managing Director, 100% shareholder and Authorized Signatory, and, thereafter, using certain Foreign Institutional Investors (FIIs), got the GDRs converted into underlying shares and sold them in the Indian securities market with the help of certain domestic entities connected to him. It is further alleged that the money received from the sale of underlying shares was used to pay the loans of Vintage, thereby, fraudulently making Indian investors pay for such GDR issue of Avon.
Page 3 of 61 (hereinafter referred to as ‘PFUTP Regulations’). Further, it is also alleged that the Noticee had submitted false information and, by doing so, has violated the provisions of Section 11C(3) read with 11C(6) of the SEBI Act. APPOINTMENT OF ADJUDICATING OFFICER
Page 4 of 61 5. The relevant part of SCN including details in respect of alleged violations by the Noticee are as given below: a. It is observed from the Investigation Report (hereinafter referred to as “IR”) that Avon had issued 16,00,000 GDRs representing 4,80,00,000 underlying equity shares of Rs 10/- each at $6.25 amounting to US $10 million on June 19, 2009. The total capital raised by Avon vide GDRs was US $1,00,00,000 which is equal to Rs. 48,13,00,000 considering conversion price of USD 1 = Rs. 48.13 as on June 19,
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Source: SecMarx — sebi:Order/KS/VC/2020-21/7595. 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.