Markets regulator Sebi has imposed a penalty of Rs 5 lakh on merchant banker Ashika Capital for failing to performdue diligence with respect to disclosures made in the IPO papers of Sudar Industries.
Sebi had conducted an investigation in the Initial Public Offer (IPO) of Sudar Industries Ltd (SIL) between March 11-18, 2011.
In the IPO papers, it was mentioned that the Key Management Personnel are not related parties. Sebi, in its probe, however found that the disclosure was incorrect. Besides, there was no disclosure about related party transactions.
Noticee (Ashika Capital) had passively / mechanically disclosed whatever was given to it by the issuer company and not independently exercised reasonable diligence while acting as the book running lead manager in the IPO of SIL to ensure adequate, true and fair disclosures in the RHP/Prospectus, thereby depriving investors of material information to enable them to make a balanced and well informed decision," Sebi said in its order on Monday.
By doing so, it has violated the provisions of ICDR (Issue of Capital Disclosure Requirements) norms and code of conduct prescribed for merchant banker.
Accordingly, the Securities and Exchange Board of India (Sebi) has levied the fine of Rs 5 lakh on the merchant banker.
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