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In one of its biggest penalties, SEBI today slapped a cumulative fine of Rs 53.50 crore on 25 entities for alleged irregularities in initial public offer (IPO) of Brooks Laboratories.
The Securities and Exchange Board of India (SEBI) has found that these 25 entities had siphoned off funds from the IPO proceeds of Brooks in alliance with the company promoters.
Citing that the fraudulent trade practice adopted by the entities which include 15 companies and their directors “is serious in nature”, the market regulator has imposed “a total penalty of Rs 53.50 crore” upon all of them.
Individually, the regulator has slapped penalties ranging from Rs 10 lakh to as much as Rs 30.60 crore on the entities.
SEBI investigation found an amount of Rs 8.25 crore was fraudulently siphoned off by the Konark Commercial & Industries, Shardaraj Tradefin, Blue Print Securities and Sunshine Housecon in collusion with promoters of Brooks from the company’s IPO proceeds.
“...it is clear that through fictitious transactions of round tripping of funds, the said noticees ie Konark, Blue Print, Sunshine and Shardaraj along with the promoters of Brooks, had siphoned off the funds to the tune of Rs 8 crores from the IPO proceeds,” SEBI said.
Moreover, SEBI noticed that one of the entity, Suryamukhi Projects, had received Rs 15.30 crores in advance “without the infrastructure being developed at the project site, which ultimately is siphoning off the funds from Brooks”. Suryamukhi has been fined with Rs 30.60 crore by the market regulator for such act.
Besides, the penalties included Rs 5 crore on Overall Financial Consultants which had misutilised a sum of Rs 2.50 crore it had received from other entities to cover the losses it had made from trading in shares of Brooks.
“Such act/practice as adopted by the noticees (25 entities) is serious in nature which has the cascading adverse effect towards the investors/shareholders,” SEBI said in the order.
SEBI had initiated an investigation into the alleged irregularities in IPO of Brooks for the period June 2011 to September 2011.
The probe had found that Brooks board of directors passed certain resolutions to raise funds through Inter Corporate Deposits (ICDs) from some of the alleged entities.
It was revealed that Konark, Shardaraj, Suryamukhi, Blue Print and Sunshine Housecon had fraudulently acted as layers to Brooks for round tripping of Rs 8 crores in the guise of ICDs, and were then subsequently paid Rs 8.25 crores by Brooks from the IPO proceeds.
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