Market regulator Sebi on Tuesday levied a total penalty of Rs 1.8 crore on Edynamics Solutions Ltd (EDSL) and four individuals for violating securities market norms. In September 2017, the regulator had issued an interim order against the company and asked the exchange (BSE) to appoint an independent auditor to conduct a forensic audit of Edynamics for verification, including its financials, and trace the end-use of funds raised by the company from the public.
It was found that despite various correspondences by the forensic auditor and BSE, EDSL failed to furnish the information essential to conduct the exercise of a forensic audit, Sebi said in its order on Tuesday. Also, EDSL had misrepresented the book of accounts to the tune of Rs 37 crore, the regulator noted.
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By making misrepresentations in its book of accounts, EDSL has indulged in a fraudulent act as its misrepresented books and accounts had the potential to induce the investors to trade in its scrip, it added. It further said four individuals — Bharat Gupta, Vinod Kumar, Vikas Saini and Anita Gupta — who were directors of the company at the time of violation have failed to discharge their fiduciary responsibility.
They failed in their duty to exercise due care and diligence and allowed the company to fabricate the figures and making false disclosures in the form of misrepresenting the books of accounts of the company, Sebi pointed out. Securities and Exchange Board of India said the entities had not provided information as was required from them during the hearing granted before passing of the interim order and also did not file any reply to the interim order.
Thus, by completely disobeying and disregarding the directions of Sebi, the entities failed to comply with these mandatory statutory obligations, it said. Such non-compliance and contraventions are very serious and should be dealt with sternly by imposing a monetary penalty, the order noted.
For the violations, Rs 1 crore has been imposed on– Edynamics Solutions and four individuals, which needs to be paid jointly and severally. Besides, a fine of Rs 60 lakh has been levied on Edynamics Solutions. Further, a monetary penalty totalling Rs 20 lakh has been imposed on the four individuals.
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