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SEBI imposes Rs 2.3 crore fine on 32 entities for diverting IPO funds

SEBI imposes Rs 2.3 crore fine on 32 entities for diverting IPO funds

Penalty has been levied in the range of Rs 5 lakh to Rs 20 lakh on the entities, including MVEL (Midvalley Entertainment Ltd).

The order came after Sebi conducted an investigation in the matter of IPO of MVEL for the period January-February 2011. The order came after Sebi conducted an investigation in the matter of IPO of MVEL for the period January-February 2011.

Capital markets regulator Sebi on Tuesday imposed fines totalling to Rs 2.3 crore on 32 entities for indulging in misutilisation of the IPO proceeds in the matter of Midvalley Entertainment Ltd.

Penalty has been levied in the range of Rs 5 lakh to Rs 20 lakh on the entities, including MVEL (Midvalley Entertainment Ltd).

The Initial Public Offering (IPO) of MVEL was listed on BSE in January 2011.

The order came after Sebi conducted an investigation in the matter of IPO of MVEL for the period January-February 2011.

It was found that MVEL had deviated from the objects of the issue and has not utilised the IPO proceeds as stated in the draft prospectus.

Apart from the company, the directors also recklessly omitted to perform their part, which resulted in diversion of IPO proceeds, and has not exercised any due diligence to prevent the offence.

By doing so, they flouted the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations.

Meanwhile, in another order, the regulator levied a fine of Rs 50 lakh on 20 entities for violating Sebi's directions.

The order came after Sebi received a suspicious transaction report from financial intelligence unit generated by ICICI Bank.

The regulator found debarred noticees -- Beejay Investments & Financial Consultants Pvt Ltd and its directors and Eversight Tradecomm and its directors had indirectly traded in securities during the prohibition period of January 19-25, 2010.

Further, the market watchdog observed four entities -- Neelanchal Mercantile Pvt Ltd, Divyadrishti Traders Pvt Ltd, Stupendors Traders Private Limited and Flex Trade Pvt Ltd -- and their directors -- have acted as conduits in transferring funds from the debarred noticees to the other entities, thereby violated the directions issued by Sebi.

Separately, Sebi levied penalty of Rs 36 lakh on 12 entities for indulging in manipulating the share prices of Global Securities Ltd.

In another order, the regulator slapped fines totalling to Rs 5 lakh each on Abhishek Nidhi, Anand Jain HUF and Amish Chinubhai Shah for indulging in non-genuine trades in illiquid stock options at BSE.