HDFC Mutual Fund initial public offering may be delayed as SEBI examines ‘past violations’
SEBI said in a status report that it has sent a letter to lead manager Kotak Mahindra Bank that proceedings have been kept in abeyance for examination of past violations.
May 04, 2018 / 04:23 PM IST
The proposed Initial Public Offering (IPO) by HDFC Mutual Fund may be delayed due to ongoing investigations into “past violations”. The company had applied for the IPO on March 15 and SEBI has now halted proceedings.
In its status report, the regulator said, “SEBI has sent a letter to lead manager Kotak Mahindra Bank that proceedings have been kept in abeyance for examination of past violations.”
The Draft Red Herring Prospectus of HDFC Mutual Fund says: “We are involved in an investigation initiated by SEBI with regard to alleged front-running and violation of securities laws.”
As per the DRHP, SEBI carried out an investigation into the alleged front-running of trade orders of HDFC Mutual Fund by a certain set of persons on the basis of information provided by Nilesh Kapadia, formerly a dealer [in equities].
“In July 24, 2014, amongst other things, prohibited Nilesh Kapadia and certain other accused persons from accessing the securities market, or buying, selling or otherwise dealing in securities, for a period of ten years for violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. No directions were issued against the Trustee Company, our Company or our Managing Director in SEBI's orders dated July 24, 2014, and January 15, 2016.”
The further states, “Our company deposited the total amount of losses suffered by the investors during the period November 2001 to September 2007, aggregating to ₹ 69.69 million, as determined by SEBI, in a segregated bank account maintained with the Trustee Company. Our Company has thereafter compensated the concerned investors in accordance with the aforementioned directions issued by SEBI.”
However, a source in the company said, “The regulator has in the past dropped adjudication and investigation against companies. We are in discussion with the lead banker and SEBI on the recent developments.”