sebi:WTM/SR/SEBI/EFD/161/09/2015
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Facts / Headnote
Violations established; Noticees prohibited from securities market activities for 5 years with conditional release of escrowed IPO proceeds
Provisions invoked
- s. 19
Regulations
- Reg. 3
- Reg. 4
- Reg. 4(1)
- Reg. 47
- Reg. 55
- Reg. 57(1)
- Reg. 57(2)
- Reg. 11(1)
- Reg. 19
Parties
- Brooks Laboratories Limited
- Mr. Atul Ranchal - Chairman
- Mr. Rajesh Mahajan - Managing Director
- Mr. Durga Shankar Maity - Chief Executive Officer
- Mr. Ketan Shah - Chief Financial Officer
- Ms. Parvinder Kaur - Company Secretary
Holding
SEBI held Brooks Laboratories and its directors/officers liable for material non-disclosures and diversion/siphoning of IPO-related funds and prohibited them from buying, selling, dealing in or raising capital from the securities market for 5 years, while permitting supervised withdrawal of escrowed unutilized IPO proceeds for stated objects.
Full text
Page 2 of 42 3. Item-wise objects of the Issue as disclosed in the Prospectus were as under – 4. Securities and Exchange Board of India (hereinafter referred to as "SEBI"), received several complaints in respect of the said IPO of Brooks wherein it was alleged that on the listing day i.e. September 5, 2011 the price of the scrip went down and that a fraud was committed by the management of Brooks in collusion with the merchant bankers and other operators. In view of this, SEBI conducted a
Page 3 of 42 6. On the basis of the aforesaid prima facie findings, SEBI, vide ad interim ex-parte Order dated December 28, 2011 inter alia prohibited Brooks, its directors and other key personnel from accessing the securities market and further prohibited it from buying, selling or dealing in securities market, directly or indirectly till further orders. Brooks was further directed to call back the ICDs advanced by it to several entities. Subsequently, as per the SEBI directions, the company deposited the unutilized proceeds of IPO, i.e. `14.40 crores in an escrow account. SEBI vide order dated July 9, 2013 also confirmed the directions of the ad-interim ex-parte order dated December 28, 2011 against Brooks and Mr. Atul Ranchal, Mr. Rajesh Mahajan, Mr. Durga Shankar Maity, Mr. Ketan Shah and Ms. Parvinder Kaur and vacated the interim
Page 4 of 42 b. Non–disclosure of (i)appointment of Suryamukhi Projects Pvt. Ltd as project contractor as also the (ii) an advance payment of `15.30 crores (full amount of the contract to Suryamukhi; c. Non–disclosure of (i)Appointment of Neo Power Universal FZ LLC, UAE as Supplier for plant and machinery and (ii) making an advance payment of `13.97 crores to Neo Power (substantial amount of the contract). ii. siphoned off and diverted IPO proceeds:- a. through purchase orders. b. through repayment of ICDs raised from certain related entities prior to the issue. iii. failed to comply with certain directions contained in the Interim Order (applicable only to Brooks).
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Source: SecMarx — sebi:WTM/SR/SEBI/EFD/161/09/2015. 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.