sebi:WTM/AB/EFD-1/DRA-1/11/2019-20
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
AOL and Noticee no. 2 restrained from securities market for 5 years; Noticees 3-6 prohibited from dealing in securities for 6 months; holdings frozen during restraint period.
Provisions invoked
- s. 11(4)
- s. 19
- s. 12A
- s. 11(2)
- s. 65
- s. 376
- s. 66
- s. 54
Regulations
- Reg. 4
- Reg. 3
- Reg. 4(1)
- Reg. 4(2)
- Reg. 2(c)
- Reg. 3(a)
Parties
- Aksh Optifibre Ltd. (Noticee no. 1)
- Kailash S. Chaudhari, Managing Director (Noticee no. 2)
- Noticee no. 3 (Independent/Non-executive Director)
- Noticee no. 4 (Independent/Non-executive Director)
- Narendra Kumbhat (Noticee no. 5)
- Arun Sood (Noticee no. 6)
Holding
AOL violated section 12A(a),(b),(c) of SEBI Act and Regulations 3(a)-(d), 4(1), 4(2)(f),(k),(r) of PFUTP Regulations by pledging GDR proceeds to secure a loan taken by Vintage FZE to subscribe to AOL's own GDR issue, thereby defrauding the securities market. Noticee no. 2 (MD) was held liable as a party to the fraudulent scheme; Noticees 3-6 (independent directors) were found to have failed in their duty of care but not held liable for fraud.
Full text
Final Order in the matter of Aksh Optifibre Ltd. Page 2 of 35 GDR issue date No. of GDRs issued (mn.) Capital raised (USD mn.) Local custodi an No. of equity shares underlying GDRs Global Deposito ry Bank Lead Manager Bank where GDR proceed s deposite d GDRs listed on 01- Sep- 2010 1.17 (at USD 21.45 each GDR) 25.00 DBS Bank, Mumbai 5,82,87,500 The Bank of New York Mellon Prospect Capital Ltd., London EURAM Bank, Austria Luxemb ourg Stock Exchan ge
Final Order in the matter of Aksh Optifibre Ltd. Page 3 of 35 6 Copy of Escrow Account Statement of AOL with Euram Bank. 7 Copy of Loan account statement of Vintage with Euram Bank.
Final Order in the matter of Aksh Optifibre Ltd. Page 4 of 35 e. The Company reported to the stock exchange (BSE) on September 02, 2010 that “…the Company has successfully closed its GDR issue of US$ 25Mn and the Board of Directors of the Company in its meeting held on September 01, 2010, has allotted 58,287,500 equity shares underlying 1165750 GDRs....” which might have made investors believe that the said GDR issue was genuinely subscribed. Further, AOL furnished wrong information to SEBI by providing false list of GDR subscribers. Therefore, the entire scheme involving entering into Pledge Agreement, making corporate announcement that the GDRs were successfully subscribed without disclosing the arrangement to the investors resulted in publication of misleading news to the stock exchanges which contained information in distorted manner and which might have influenced the decision of the investors. Such announcements misled Indian retail investors and induced investors to deal in shares of AOL in Indian capital market. Therefore, the scheme of issuance of GDRs was fraudulent and thus AOL was alleged to have violated the provisions of section 12A (a), (b), (c) of SEBI Act, 1992 read with Regulations 3(a), (b), (c), (d), 4(1), 4(2)(f), (k), (r) of SEBI (PFUTP) Regulations and Noticee no. 2 to 6 are alleged to have violated section 12A(a), (b), (c) of SEBI Act, 1992 read with Regulations 3(a), (b), (c), (d) and 4(1) of SEBI (PFUTP) Regulations.
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:WTM/AB/EFD-1/DRA-1/11/2019-20. 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.