In a 92-page order, the watchdog has imposed a three-year ban on Zenith Birla, Arun Panchariya and Vintage FZE.
Besides, High Blue Sky Emerging Market Fund, Pan Asia Advisors Ltd, Mukesh Chauradiya, India Focus Cardinal Fund and P V R Murthy have been barred from the securities marketplace for two years.
According to the order, Panchariya, Vintage FZE, India Focus Cardinal Fund and Blue Sky Emerging Market Fund must disgorge, collectively and severally, unlawful beneficial properties of Rs 59.06 crore made by the use of sale of equity shares after conversion of GDRs (Global Depository Receipts) of Zenith by IFCF and HBS as sub-accounts within the Indian securities market.
This quantity needs to be disgorged together with an curiosity of six per cent every year from the date of sale of these fairness shares, inside 45 days, Sebi stated.
In case they fail to adjust to the course inside the stipulated time, Sebi stated they’d be restrained from accessing the securities market until the precise fee of disgorgement quantity or until the completion of their debarment, whichever is later.
(*6*) the order stated.
While passing the order, Sebi Whole Time Member S Okay Mohanty stated that Zenith Birla ought to proceed to pursue all of the measures to carry again the (*7*) amounting to USD 14.50 million into its checking account in India.
After bringing the excellent GDR proceeds into its Indian checking account, it ought to furnish a certificates from a peer reviewed chartered accountant together with vital documentary evidences to Sebi, certifying compliance with the course, he stated within the order.
The case pertains to issuance of GDRs by Zenith Birla. It had issued 1.81 million GDRs for USD 22.99 million in May 2010.
Sebi famous that European American Investment Bank AG, Austria (Euram Bank) had granted a mortgage to Vintage FZE to subscribe to the GDRs.
Panchariya had signed the mortgage settlement on the behalf of Vintage as Managing Director and the difficulty was subscribed solely by Vintage.
As per Sebi, the corporate pledged its complete GDR proceeds with Euram Bank as a safety towards the mortgage availed by Vintage for subscribing to the GDRs.
It was additionally discovered that each one the 1.81 million GDRs had been cancelled and transformed into fairness shares. After cancellation, it was seen that 4.77 crore shares of Zenith on conversion of 13.77 lakh GDRs had been bought within the Indian securities market via FII-sub account specifically India Focus Cardinal Fund (IFCF).
Similarly, 1.15 crore shares of Zenith on conversion of 319,626 GDRs had been bought within the Indian securities market via FII-sub account specifically High Blue Sky Emerging Market Fund (HBS).
“In my opinion, without the role and support of CCP and Golden Cliff, the said fraudulent scheme conceived by the company pertaining to the issuance of GDRs followed by loan default by Vintage, forfeiture of GDR proceeds by Euram Bank and unlawful gains made by IFCF and HBS out of the underlying equity shares of those GDRs of Zenith which were allotted to Vintage for inadequate consideration, could not have been completed…,” Mohanty stated within the order.
He additionally famous that these underlying fairness shares of Zenith couldn’t have been dumped within the Indian securities market.
Panchariya was additionally a director at Pan Asia Advisors Ltd, which was the lead supervisor of Zenith’s GDR problem.
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