Ranbaxy Laboratories' financial arm Vidyut Investments, which was barred from dealing in equity markets for allegedly funding Ketan Parekh entities, has been let off with a slight reprimand by the Securities Appellate Tribunal (SAT).
Vidyut Investments, a wholly-owned NBFC of Ranbaxy, was alleged to have "aided, abetted and assisted Ketan Parekh entities," which had rigged and manipulated the market by creating artificial volumes in scrips of various firms.
Market regulator SEBI had, in January 2007, found Vidyut Investments guilty of the charges levelled against it and had accordingly barred it from selling or dealing in securities for two years except the shares pledged with it in its capacity of NBFC.
SAT yesterday gave a clean chit to Vidyut and held that "we deem it appropriate to direct the appellant to be careful in the future and not to lend or borrow securities otherwise than in accordance with the scheme".
Setting aside the order of the market regulator, SAT held that the findings of the adjudicating officer that the NBFC and Classic and Panther (Ketan Parekh entities) acted in consensus while acquiring the shares could not be upheld, as the activity was done by Vidyut Investments in its ordinary course of business.
The NBFC was issued three show-cause notices for allegedly funding the money to Classic Credit Ltd and Panther Fincap and management services without going through the approved intermediaries.
Further, in case of lending shares to entities of Ketan Parekh, SEBI had alleged that the NBFC violated the scheme, adding that lending of 49 lakh shares to the entities of Ketan Parekh was not done through the appropriate intermediaries, as provided in the scheme.