GDR manipulation: Sebi bans Rana Sugars, directors from securities market
Sebi also directed the firm to bring back a sum of USD 2.27 million, which was diverted to Seazun, into the company's bank account in India within a period of three months.
The regulator, after conducting a probe between April 2006 and May 2006, noted that the company had issued 2.45 million GDR worth USD 18 million on May 15, 2006.
It was also observed that the entire 2.45 million GDRs were subscribed by only one entity, Seazun, on obtaining a loan from Banco Efisa S.A.
Besides, the company acted as guarantor and deposited the entire GDR proceeds received from Seazun with Banco Bank as security against the loan that for subscribing to the GDRs issued by the company.
Sebi noted that "the GDR issue would not have been subscribed, if the company had not given such a security against the loan taken by Seazun."
Additionally, the GDRs were subsequently converted into equity shares and were sold in the Indian securities market.
Sebi further noted that "an amount of USD 2.27 million has been diverted for no bonafide reason by the company from its GDR proceeds to Seazun".
The company also failed to make requisite disclosures pertaining to the GDR issue.
Accordingly, the regulator has restrained the firm from accessing the securities market for 5 years.
The directors -- Rana Ranjit Singh, Rana Inder Pratap Singh, A. S. Sodhi, S.A.S. Bajwa, Rana Veer Pratap Singh and Baljit Singh -- have been barred for varying time periods.
Through separate orders, Sebi levied a fine of Rs 25,000 each on seven entities for violating provisions of the Securities Contracts (Regulation) Act.
The entities had transferred and received shares of L&T Finance Holdings Ltd to and from a client in off-market transactions for which they were required to receive and make payment considerations. However, they failed to do so. SRS HRS