The Securities Appellate Tribunal (SAT) has directed SEBI to hold fresh proceedings against two entities in the IPO scam case of 2003-2005.
It set aside SEBI’s order against Jayesh P Khandwala HUF and Jayesh P Khandwala for their role in the IDFC IPO. They financed scam-accused Roopalben Panchal’s IPO applications that were used to corner IDFC shares meant for retail investors.
The tribunal said there were glaring inconsistencies in SEBI’s order.
SAT observed that the SEBI whole time member who passed the order, did take note of some important submissions made by the appellant.
SAT said that SEBI has asked the accused to disgorge Rs.4.04 crore of unlawful gains along with interest of Rs 1.2 crore for financing Panchal.
SAT pointed out that SEBI arrived at this figure using Rs 12.75 crore as the sum financed whereas its own order in the Roopalben Panchal case pegged the sum at Rs.7.87 crore.
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It also found that SEBI, in calculating the disgorgement amount, had added the financing by the accused in the Sasken IPO case. However, SEBI’s impugned order did not show that they had financed the Sasken IPO, said SAT.
SAT concluded that only ill-gotten gains can be ordered to be disgorged and that the disgorgement amount should not exceed the total profits realized as a result of unlawful activity. Hence it directed SEBI to hold fresh proceedings.