Markets regulator Sebi today imposed a penalty of Rs 10 lakh on Krishna Enterprises and Rajesh Services Centre for aiding Edserv Softsystems in "fraudulently" siphoning off the funds from its IPO proceeds.
The Securities and Exchange Board of India (Sebi) had conducted an investigation into the initial public offer (IPO) of Edserv on NSE for the period from March 2-9, 2009 and on BSE from March 2-6, 2009.
During the probe, it was observed that Rs 4.75 crore had been siphoned off fraudulently from Edserv and certain entities including Krishna Enterprises -- K Rajendran being its sole proprietor -- and Rajesh Services Centre -- R Dhanalakshmi being its sole proprietor -- aided and abetted the firm in moving out the funds.
In an order, Sebi said Krishna Enterprises and Rajesh Services Centre had diverted Rs 1.5 crore and Rs 2.25 crore, respectively, out of Rs 3.75 crore received from Edserv and had in collusion with it, acted as layers in transferring the entire sum to Mahadev Impexs, Shiv Impexs, S K Alloys & Trading and Ramco International either on same day or the next day.
Krishna Enterprises and Rajesh Services Centre had thereby aided/ abetted Edserv in "fraudulently siphoning off the funds from its IPO proceeds", Sebi said, adding that their act is in violation of the PFUTP (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) regulations.
For the violation, Sebi has imposed a penalty of Rs 5 lakh each on both the entities.
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