Sebi slaps of Rs 14 lakh fine on IFCI

Markets regulator Sebi today imposed a penalty of Rs 14 lakh on term lender IFCI Ltd for violating disclosure norms.

The regulator's order has come following an investigation into trading in shares of Glodyne Technoserve Ltd (GTL) during January, 2012 to April 20, 2013 for suspected price manipulation by promoter entities of the firm.

According to a show cause notice issued by Sebi to IFCI, the term lender had provided loan to Glodyne Ventures and Holdings for which the shares of GTL held by its promoter Divvyani Sarnaaik were pledged with IFCI.

IFCI had an aggregate of 5 per cent or more of the share capital of GTL in the form of the pledged shares, which were subsequently invoked by the term lender.
 

Following the invocation of pledge, there was an increase in IFCI's shareholding in GTL with regard to which the term lender was required to make disclosures.

It was alleged that IFCI had failed to make the required disclosures in terms of SAST (Substantial Acquisition of Shares and Takeovers) Regulations and PIT (Prohibition of Insider Trading) Regulations.

"The noticee (IFCI Ltd) was required to make disclosures upon invocation of pledge," Sebi said in an order.

As the non-disclosure to the stock exchange and GTL regarding holding or acquisition of 5 per cent or more of the share capital of GTL and subsequent change in shareholding by more than 2 per cent due to invocation of pledge by IFCI remained undisputed, therefore, in view of such non discourse, it is established that the term lender had violated the SAST Regulations and the PIT Regulations, it added.

For the violations, the regulator has imposed a penalty of Rs 14 lakh on IFCI.

IFCI had contented that it was a public financial institution and Government of India undertaking engaged in the business of lending to companies and being the pledgee it had invoked the pledge only for selling the shares to recover dues.

However, Sebi noted that upon invocation of pledge, IFCI became the beneficial owner of the invoked shares and therefore, the same attracted disclosure requirement in terms of SAST Regulations and PIT Regulations.

In a separate order, Sebi has also imposed a fine of Rs 2 lakh on GTL's former company secretary and compliance officer, Amit Jaste, for disclosure lapses.