Chairperson of KEI Industries along with six present and former directors have settled a GDR manipulation case with Sebi by paying a total of Rs 4.6 crore towards settlement charges.
On September 16, 2005, KEI had issued 2.173 million GDRs (Global Depository Receipts) amounting to USD 10 million.
The regulator had initiated adjudication proceedings against the seven directors and sent a notice in June 2017, alleging that KEI and its board of directors attempted to mislead the investors by deliberately making statements that the GDR issue had been subscribed by several investors, when actually the issue was subscribed by only one entity, Fusion Investments Ltd.
However, the subscription amount was paid by Fusion after obtaining loan from Banco Efisa, Portugal which was secured by pledge agreement between KEI and Banco, the regulator said.
Further, KEI and the board suppressed the facts that the company had provided financial assistance by means of pledge agreement to Fusion for subscription of its own GDR issue, Sebi said.
By doing so, the directors allegedly violated PFUTP (Prohibition of fraudulent and Unfair Trade Practices) norms, the regulator said.
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Archana Gupta, Pawan Bholusaria, Vijay Bhushan, Vikram Bhartia, Rajeev Gupta and Sunil Gupta are the six other directors, as per a Sebi order dated February 28.
Barring Sunil Gupta, the other five are currently directors of the company. Anil Gupta was the chairperson and executive director of the firm.
While the proceedings were pending, the Securities and Exchange Board of India (Sebi) received applications from the directors under the settlement mechanism.
The company in its meeting with the regulator's internal committee in November 2018 proposed to pay a total Rs 4.62 crore as settlement charges.
The amount was approved by the panel of whole-time members of Sebi, the regulator said.
Accordingly, Anil Gupta, Archana Gupta and Sunil Gupta paid Rs 1.36 crore each, while Pawan Bholusaria, Vijay Bhushan, Vikram Bhartia and Rajeev Gupta paid Rs 13.60 lakh each and Sebi thereby "settled" the proceedings against them.