Lawstreet Journal

SEBI Imposes Fine of Rs. 45 Lakh on Three Individuals for IPO Fund Diversion

Lawstreet Journal 23 Nov 2020 8:16pm

Image courtesy: Lawstreet Journal Executive SEBI Imposes Fine of Rs. 45 Lakh on Three Individuals for IPO Fund Diversion

SEBI on Friday (20th November 2020) slapped Rs.45 lakh rupees in fine on three individuals for diverting proceeds from the Initial public offer of paramount print packaging Ltd (PPL) and making wrong disclosures. Individual fine of Rs 15 lakh each has also been imposed on Divyesh Ashwin Dharmesh Ashwin and Anuj Vipin as per the said order. 

According to the order, PPL as a company had mis-utilised Rs 35 crores and diverted Rs 34 crores to nine vendors. The three individuals provided wrong disclosures in the prospectus, as they never intended to utilize the IPO proceeds for the objects states in the prospectus. 

As per the investigation done by SEBI, it was observed that PPL first raised money through the IPO route by concealing material information and making false disclosures regarding vendors. Later, the money was transferred to pre-decided vendors within a few days and thereby mis-utilized and diverted the IPO proceeds. 

Further it was noted that the account of PPL became a non-performing asset by the end of 2013. In 2018, the Bombay High Court ordered winding up of the company. Noting that PPL was owned by Sukhadia family, the regulator that the three individuals were in charge of the company before and listing of its shares. 

SEBI’ sadjudicating officer Prasanta Mahapatra said in the order, “I find that by making reckless and careless representation and by making false, misleading, deceptive, and manipulative disclosures in the prospectus the notices misled the investors and induced them to subscribe to the shares in the IPO… Continue Reading...


Tagged: SEBI   Securities and Exchange Board of India (SEBI)  
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