Sebi today barred Rikhav Securities from syndicate member work for 4 years for fraudulent trade practices in Vaswani Industries IPO, but said the period of prohibition already undergone by the firm following the July 2011 interim order would be set off from the debarment.
The Sebi probe found that Rikhav Securities was one of the largest brokers/sub-syndicate members with respect to bidding in both Non-institutional Investors (NII) and Retail Individual Investor (RII) categories, and contributed to about 82 per cent of the issue size.
As per investigations, Rikhav Securities had artificially inflated the bid book and created a misleading appearance of apparently healthy subscription of the 2011 issue. The modus operandi was adopted in order to generate retail investors' interest in the scrip of Vaswani Industries Ltd (VIL).
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In the order today, Sebi said the methods adopted by Rikhav Securities "were undoubtedly with the fraudulent intention to inflate the bid book and withdraw at the last minute was nothing but a tactic to ensure that innocent investors did not withdraw their bids, thereby ensuring that the minimum subscription to the issue was attained".
Accordingly, Sebi has restrained "Rikhav Securities from acting as a syndicate/sub-syndicate member for a period of 4 years".
"The period of prohibition already undergone by Rikhav Securities in terms of Sebi interim order dated July 11, 2011, shall be set-off from the period of debarment as directed," it added.
Sebi found that Rikhav Securities had acted in concert with its group companies and placed large bids on behalf of them through its terminal under the NII category in order to inflate the bid book, to give a misleading appearance of bidding in the issue, among others.
It is further alleged that the entire bids placed on behalf of the group companies were subsequently withdrawn.
Rikhav Securities had placed large bids on behalf of its clients and then withdrew most of them.
