Sebi imposes market ban on entities, individuals for GDR manipulation

Topics SEBI | Sebi norms | GDR manipulation

Sebi | File photo

Sebi has barred two entities and five individuals for indulging in fraudulent trading activities with respect to GDR issuance by Soma Textiles & Industries Ltd.

Soma Textiles & Industries Ltd "is hereby restrained from accessing the securities market...directly or indirectly...for a period of 3 years from the date of this order," Sebi said in an order passed on Monday.

Others facing the prohibition are -- SK Somany, AK Somany, P Bandopadhyay, Prafull Anubhai, Sunil Patel and Whiteview Trading Corporation.

The ban has been imposed for a period ranging from 1-3 year.

An investigation was conducted by Sebi with respect to the GDR (Global Depository Receipt) issuance by the company during October 1-31, 2006.

The regulator in its investigation observed that Soma had issued GDRs amounting to USD 17.29 million.

It was noted that the entire GDR proceeds were subscribed to only one entity -- Whiteview Trading Corporation (Whiteview).

It was also observed that the subscription amount was paid by Whiteview by obtaining a loan from BANCO EFISA, S A - a bank based in Lisbon, Portugal.

Later, it was revealed that Whiteview signed a credit agreement with BANCO for payment of the subscription of GDRs.

The loan was further secured by Soma itself by securing the GDR proceeds, Sebi said.

Thereafter, the company had facilitated subscription of its own GDR by entering into an arrangement where Whiteview, the only subscriber to the GDR issued by Soma, obtained the loan from Banco for subscribing the issue, and Soma pledged the GDR proceeds with Banco for securing the loan taken by Whiteview from Banco, it added.

The noticees were part of the board meeting wherein, approvals were made to, among others, authorising Banco to use the GDR proceeds as security in connection with the loan and Patel had signed the account charge agreement on behalf of Soma.

The individuals were also the directors of Soma during the period when corporate announcements were made by the company regarding the GDR issue, which were false and misleading.

By doing so, they violated the provisions of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel