sebi:WTM/MPB/EFD-1-DRA-IV/104/2020

SEBI · SEBI · 2017-03-31 · Madhabi Puri Buch, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

MVEL, Sudhir Kumar Jena, K Murugavel, Vasan Chidambaram and K Ramdasan restrained from accessing securities market for 7 years; Datuk K Ketheeswaran and R Chandrasekharan restrained for 5 years and from association with listed company/SEBI registered intermediary for 5 years; S Madhavan and M Pandiyan restrained for 2 years.

Provisions invoked

• s. 11
• s. 19
• s. 12A
• s. 179
• s. 3(42)

Regulations

• Reg. 4
• Reg. 3
• Reg. 4(1)
• Reg. 200
• Reg. 2
• Reg. 2(c)
• Reg. 2(1)
• Reg. 5
• Reg. 57
• Reg. 57(1)
• Reg. 60(7)(a)
• Reg. 60(7)
• Reg. 2(a)

Parties

• Midvalley Entertainment Limited (MVEL)
• Sudhir Kumar Jena
• K Murugavel
• Vasan Chidambaram
• K Ramdasan
• Datuk K Ketheeswaran
• R Chandrasegaran
• S Madhavan
• M Pandiyan

Holding

MVEL and its directors/officers were found to have diverted IPO proceeds of Rs.50.263 crores from the stated objects of the issue and to have made non-disclosures in the RHP/Prospectus, in violation of SEBI Act, PFUTP Regulations and ICDR Regulations. Market access restrictions of varying durations (2, 5, and 7 years) were imposed on the noticees.

Full text

Order in the matter of Midvalley Entertainment Limited Page 2 of 59 BACKGROUND 1. Midvalley Entertainment Limited (hereinafter referred to as “MVEL / the company”) engaged in the media and entertainment industry in South India. The company was incorporated on July 12, 1989 and was converted into public limited company on February 04, 2000. The company came out with an Initial Public Offer (hereinafter referred to as “IPO”) for issue of 85,71,429 equity shares of face value Rs.10/- each at a price of Rs.70 per share, aggregating to Rs.60 crores during January, 2011. MVEL was listed on BSE Ltd. On January 27, 2011. The scrip opened at Rs.73/- and witnessed a steep price fall and closed at Rs.55.05.

Order in the matter of Midvalley Entertainment Limited Page 3 of 59 there were any violations of the provisions of Securities and Exchange Board of India Act, 1992 (herein after referred to as “SEBI Act”), SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (herein after referred to as “ICDR”) and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (herein after referred to as “PFUTP Regulations”). Investigation was carried out for the period January 27, 2011 to February 28, 2011 (hereinafter referred to as “Investigation Period”). SHOW CAUSE NOTICE

Order in the matter of Midvalley Entertainment Limited Page 4 of 59 MVEL). Eduexel is also connected to the merchant banker to the IPO, Aryaman Financial Services Ltd. based on common directorship (Mr. Shreyas Shrenik Shah). 6.3 In the RHP dated December 20, 2010 and Prospectus dated January 14, 2011 the directors, Compliance Officer and the Finance Manager have certified that all the statements in RHP and Prspectus are true and correct. 6.4 Out of Rs.60 crores of IPO proceeds, an amount of Rs.50.263 crore was siphoned off from the IPO proceeds by deviating from the objects of the issue and not utilising the IPO proceeds as per the objects stated in the prospectus. 6.5 Out of the above siphoned off amount of Rs.50.263 crores, an amount of Rs.24.7 crores was provided to 15 entities who traded in the scrip of MVEL with these funds. These entities are net buyers and have also provided exit to the allottees in the IPO. These 15 entities while buying shares of MVEL either bought shares of MVEL with the help of funds transferred from MVEL through other entities or were compensated through fund transfers from MVEL through other entities subsequent to their buy trades.

Source: SecMarx — sebi:WTM/MPB/EFD-1-DRA-IV/104/2020. 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.