The market regulator, Securities and Exchange Board of India, widened its investigations into alleged irregularities in initial public offers (IPOs) in 2011. Last December, it passed orders against seven companies.

“SEBI has widened the scope of its investigation by including 19 additional companies that issued initial public offers,” the Minister of State for Finance, Mr Namo Narain Meena, said in a written reply in the Lok Sabha on Friday. He was responding to a question on whether SEBI had widened the scope of its investigation into misuse of funds or price manipulation by some of the companies that came out with IPOs last year.

Gives No time-frame

However, the Government admitted that the extent of funds that might have been misused by the companies concerned had not yet been quantified. It has also not given any time-frame of when the investigation will be completed.

SEBI's investigation is likely to focus on four aspects. The first will check adequacy, accuracy and completeness of disclosures made in the offer document and the standards of due diligence carried out by the merchant banker. The second will probe misutilisation or diversion of funds, if any, from the IPO proceeds.

The third aspect will look for possible violations in relation to the bidding/ trading pattern in the shares of the company on the day of listing and immediately thereafter. And lastly, it will try to find other consequential or related matters.

Earlier, SEBI conducted preliminary investigations into matters related to IPOs by PG Electroplast Ltd, Brooks Laboratories Ltd, RDB Rasayans Ltd, Taksheel Solutions Ltd, Tijaria Polypipes Ltd, Onelife Capital Advisors Ltd and Bharatiya Global Infomedia Ltd.

In ad interim, ex-parte orders passed against these companies dated December 28, 2011, the regulator initiated various steps. These include debarring companies and their directors from accessing the capital market till further order, besides others.

>shishir.s@thehindu.co.in

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