SEBI imposes Rs 3 cr penalty on 4 entities in RDB IPO case

Capital market watchdog Sebi has slapped a penalty of Rs 3 crore on four entities for fraudulent and unfair trade practices related to the initial public offering of RDB Rasayans Ltd.

Securities and Exchange Board of India (Sebi) has imposed a fine of Rs 2 crore on Dave Harihar Kiritbhai and a total Rs 1 crore on three other entities --Shreyanshnath Shares and Financial Services Pvt Ltd, Patel Kirtikumar Gopalbhai and Chauhan Vijaykumar Babubhai.

RDB had come out with an IPO of 45 lakh shares, at an issue price of Rs 79 each in September 2011.

The market regulator had probed the company's IPO and subsequent trading on and around the listing day as the scrip witnessed wide price fluctuations on the BSE.

In an order dated January 30, Sebi's Adjudicating Officer D Ravi Kumar imposed a penalty of Rs 2 crore on Kiritbhai. According to the order, the noticee failed to co-operate in the current adjudication proceedings despite being provided opportunities.

"... it can be concluded that IPO money was routed by RDB through a web of inter-connected entities to make the transaction look complex and hide the actual source of the money in order to enable noticee to make payments to its stock broker on time," it noted.

In the show cause notice, it was alleged that part of the IPO proceeds was routed in a circuitous manner by RDB to noticee (Kiritbhai) in order to enable him to make payments to his stock broker on time.

In a separate order, Sebi has slapped a penalty of Rs 1 crore on three entities related to RDB IPO.

"I hereby impose a penalty of Rs 1 crore jointly and severally on Shreyanshnath Shares and Financial Services Pvt Ltd, Patel Kirtikumar Gopalbhai and Chauhan Vijaykumar Babubhai...," Ravi Kumar said in the order.