Regulator Sebi on Monday barred an entity from dealing in the securities market for three months and asked it to pay Rs 7.62 crore for irregularities in the IPOs of IDFC, Sasken Communication and Suzlon Energy.
Sebi directed the HUF (Hindu Undivided Family) entity, headed by Zealous Trading Company proprietor Jayesh Khandwala, to disgorge unlawful gains of Rs 3.88 crore in the IPO demat scam. Thousands of fictitious demat accounts were created to corner shares meant for the retail investors.
Besides, he will have to pay another Rs 3.74 crore as interest at 12 per cent per annum, for eight years (2005-13) on such gains.
In case of failure to pay the said amount within 45 days from the date of the order, Khandwala would be restrained from the securities market for an additional period of seven years.
A Sebi investigation into the IPO demat scam found that Khandwala provided finance to various operators to make applications in the retail category of IPOs of IDFC Ltd, Sasken Communications Technologies and Suzlon Energy.
Upon allotment of shares in these IPOs the operators subsequently transferred these shares and corresponding refunds to Khandwala who in turn disposed of the said shares and made an unlawful gain.
"...Jayesh had employed fraudulent, deceptive and manipulative practices to corner the shares meant for retail individual investors in the aforesaid IPOs and made unlawful gains," Sebi said.
The regulator further said that in the interests of the securities market and of the investors require that Khandwala is not allowed to participate in the market and unjustly enrich himself at the cost of investors.
"Such acts of serious irregularities threaten the market integrity and orderly development of the market and call for regulatory intervention to protect the interest of investors," Sebi said in the order.