The Securities and Exchange Board of India (SEBI) has agreed to settle charges against four entities for alleged irregularities in the IPO scam of 2003-05, after a total payment of about Rs.3.30 crore towards settlement charges and disgorgement ill-gotten gains made by them.
As per the settlement reached through the regulator’s consent mechanism, which allows for settling of charges after payment of certain fees and disgorgement of any illegal gains, the four entities — Bahubali Shantilal Shah, Lok Prakashan Ltd., Shreyans S. Shah and Smruti S Shah — have collectively made the payment without admission or denial of charges, SEBI said.
The matter relates to SEBI’s investigation into irregularities in initial public offers of various companies, including IDFC and IL&FS during 2003-05.
SEBI said the probe had found that the four entities provided funds to key operators for cornering shares reserved for retail individual investors in IDFC and IL&FS IPOs.
After its preliminary probe, SEBI had restrained the four entities in January, 2006, from dealing in shares of IDFC and other ensuing IPOs till further directions.
Pursuant to further investigations, SEBI issued show-cause notices for alleged fraudulent and unfair trading activities by the entities concerned, while proposing a direction to restrain them from securities market. While the proceedings were in progress against them, the four entities offered a settlement of charges through SEBI’s consent mechanism.
The settlement proposal was revised further in April, after which SEBI’s high-power advisory committee recommended the case for settlement on payment of Rs.1.35 crore as settlement charges and Rs.1.92 crore towards disgorgement of ill-gotten gains made by them, collectively.