An individual has settled with markets regulator Sebi a case of alleged fraudulent trading in IPOs of IDFC, Sasken and Suzlon by paying over Rs 98 lakh as settlement charges and disgorging over Rs 1 crore of unlawful gains. The matter pertains to an investigation conducted by Sebi into the alleged irregularities in IPOs of IDFC, Sasken and Suzlon.
It was alleged that a group of financiers provided finance to key operators towards making multiple applications in the IPOs and cornered a large number of shares reserved for retail individual investors (RIIs) and following the receipt of IPO allotment, the shares were transferred by the allottees to the key operators through an off-market transaction.
The key operators, in turn, were alleged to have transferred the shares to the financiers, who had originally made the funds available for executing the game plan. "Later on the shares allotted in the IPOs were sold upon its listing thereby realizing the windfall gain of the price difference between IPO price and the listing price," Sebi noted in the settlement order.
Besides, "the investigation concluded that the applicants (Jayesh P. Khandwala and Jayesh Khandwala HUF) were part of the ... modus operandi and had employed fraudulent, manipulative and deceptive practices to corner shares reserved for RIIs in collusion with certain other entities and the applicants had earned unlawful gains to the tune of Rs 49,45,719," it added.
However, while the proceedings were pending, Khandwala filed an application under settlement mechanism of Sebi without admitting or denying the guilt and had a meeting with the regulator's internal committee wherein the settlement terms were deliberated. The high powered advisory committee of Sebi recommended the application for settlement upon payment Rs 98.37 lakh as settlement amount and over Rs 1.32 crore as disgorgement amount including interest.
The respective amounts, after the approval of panel of whole-time members of Sebi, was remitted by Khandwala in October 2019. Accordingly, the pending adjudication proceedings have been disposed of. The regulator said that if any representation made by the individual in the settlement proceedings is subsequently discovered to be untrue, enforcement actions including commencing of proceedings can be initiated against him.