sebi:WTM/KMA/CFD/384/05/2011
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Facts / Headnote
Listing of securities deferred pending detailed investigation; investigation ordered to be completed within 30 days; issue proceeds to be placed in an interest earning account.
Provisions invoked
- s. 19
- s. 73
Regulations
- Reg. 107
Parties
- Vaswani Industries Ltd.
- Promoters of Vaswani Industries Ltd.
- Directors of Vaswani Industries Ltd.
- BRLM
- Registrar to the Issue
Holding
SEBI deferred the listing of securities of Vaswani Industries Ltd. pending completion of a detailed investigation into allegations of artificial inflation of subscriptions and subsequent withdrawals, and directed that the investigation be completed within thirty days and the public issue proceeds be placed in an interest earning account.
Full text
2 • Certain applications were submitted to artificially inflate the subscriptions in QIB and HNI category to attract and mislead the investors. Post the closure of the issue, the same applications are being withdrawn by way of stop payment, stop allotment, cheque return, wrong cheque dates, etc. • The above is a pre-planned move amongst the Promoters of the issuer company, BRLM, Registrar and the other operators. • Listing of securities of the company should be stopped till an investigation of the withdrawal of applications is completed. • Before permitting the securities of the company to list, investors should be given an exit option so that the securities allotted to them in the IPO can be withdrawn; subsequently, a call on the investment in the company can be taken by the investors post listing of the same.
3 terminal-wise summary of withdrawals along with reasons for the withdrawals/rejections was sought from the Registrars to the Issue (RTIs).
4 its Directors are liable to repay the money with interest at the rate of 15% per annum. 10. While further inquiries in the matter are in progress, SEBI weighed the following aspects:- a. Allegations in this regard pertain to irregularities in subscriptions, more particularly in the NII category, firstly by an artificial inflation of the demand in the bid book to mislead and induce participation by the RIIs, and a withdrawal of bids by the NIIs thereafter, thereby trapping the unwary RIIs. If that were borne out to be true, permitting listing in the stock exchanges at this stage would close the door for protection envisaged in the interest of investors under Section 73 of the Companies Act. b. Taking steps under the SEBI/Companies Act by ordering cancellation of the issue and refunding the funds back to the allottees without a detailed examination in the matter does not appear to be appropriate as it may prejudice the position of the issuer. c. Deferring the decision on listing pending outcome of the detailed examination of the allegations may result in the money being blocked in the public issue account with neither the issuer nor the investor being able to have access to the same.
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Source: SecMarx — sebi:WTM/KMA/CFD/384/05/2011. 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.