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Sebi imposes Rs 20 lakh fine on Sybly Industries MD for GDR manipulation

twitter-logo PTI        Last Updated: March 26, 2019  | 17:02 IST

New Delhi, Mar 26 (PTI) Capital markets regulator Sebi on Monday slapped a Rs 20 lakh fine on managing director of Sybly Industries in a matter related to manipulation in issuance of global depository receipts (GDR). The ruling came after the regulator conducted a probe to investigate irregularities in the company's allotment of 1.51 million GDR amounting to USD 6.99 million on the Luxembourg Stock Exchange in June 2008. Sebi noted that entire 1.51 million GDR were subscribed by only one entity, Vintage FZE (now known as Alta Vista International FZE). The subscription amount for GDR was paid by Vintage after obtaining loan from European American Investment Bank (EURAM). It was observed that directors of Sybly in its board meeting in March 2008 passed a board resolution that authorised EURAM Bank to use Sybly’s GDR proceeds as security in connection with the loan. It also authorised firm's managing director Mahesh Chand Mittal and director Umesh Kumar Mittal, to sign any application, agreement etc as may be required by the EURAM Bank. Following which a pledge agreement was signed between Sybly and EURAM Bank whereby Sybly pledged the GDR proceeds against the loan availed by Vintage FZE for subscribing to Sybly's GDR. Further, the Sebi said the GDR issue will not have been subscribed if the Sybly had not given such security towards the loan taken by Vintage. Besides, the company made misleading announcements that the GDR was successful whereas there was only one subscriber, the regulator noted. It said that the managing director by approving the board resolution in the board meeting and by subsequently executing the pledge agreement has acted as a party to the fraudulent scheme and violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) norms. Accordingly, a fine of Rs 20 lakh has been imposed on Mahesh Chand Mittal. PTI SRS BAL

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