The Securities and Exchange Board of India has found that RDB Rasayans' promoter and chairman Sunder Lal Dugar and directors - Sandeep Baid, Prabir Kumar Sarkar, Sachin Shridhar and Mahendra Pratap Singh - had failed to make relevant disclosure in the IPO prospectus and had also mis-utilised the proceeds from the public issue, among other things.
Accordingly, Sebi in an order today has imposed "a consolidated penalty of Rs 3 crore jointly and severally" on the chairman and the directors.
Sebi said: "The noticees have suppressed/withheld/failed to make material disclosure in the Prospectus regarding the proposal and approval for passing on/granting IPO proceeds in the form of inter-corporate loan to a group company, RDBRIL (RDB Reality and Infrastructure Ltd).
"Thus the investing public was deprived of this very important disclosure/fact while arriving at the decision whether to invest in the IPO of RDB or not."
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The market watchdog also observed that "part of IPO proceeds was routed in a circuitous manner by RDB to four trading clients in order to enable them to make payments to their stock broker on time that is as per T+2 settlement mechanism".
According to Sebi, the company's chairman and the four directors "are responsible for the actions of RDB".
The case relates to Sebi investigation of the IPO of RDB Rasayans and its subsequent trading on and around the listing days as the company's shares witnessed wide fluctuations in the price on BSE.
RDB Rasayan had come out with an IPO issue on September 21, 2011 and closed on September 23, 2011.
Additionally, the market regulator has imposed "a penalty of Rs 5 lakh on Sandeep Baid" for chairing an audit committee meeting of the company despite the presence of an independent director, thereby violating the listing agreement norms.