Sebi suspends Almondz merchant banker certificate for 6 months

Mumbai: The Securities and Exchange Board of India (Sebi) has suspended the registration certificate of Almondz Global Securities as a merchant banker for 6 months for violating norms in the initial public offer (IPO) of Bharatiya Global Infomedia Ltd (BGIL).

The case relates to BGIL using the proceeds from its IPO in a substantially different manner from the purpose disclosed in the draft prospectus. It was alleged that Almondz, as lead manager of this IPO, prima facie failed to exercise the required due diligence and it also “aided and abetted the fraud committed by BGIL and its directors/officials”.

Almondz was charged on three counts—wrong disclosure of the relationship-details with respect to the transaction between BGIL and Gadeo Electronics, non-disclosure of Inter- Corporate Deposit (ICD) raised and payments made by BGIL to various entities, and absence of an independent valuation of the software which was shown in the prospectus as assets of the company.

In an earlier ruling on 3 March, Sebi had found Almondz guilty of failure to exercise due-diligence in respect of wrong, false and misleading disclosures and also in respect of non-disclosure of ICD loans raised by BGIL.

However, with regard to the third allegation of failure to carry out independent valuation, Almondz had been given “benefit of doubt” by the regulator.

Accordingly, the market regulator in the 3 March order had barred Almondz and its two executives for six months from the capital market in the same matter. It had also prohibited from taking up any new assignment or involvement in any new issue of capital including IPO, follow-on issue for 6 months.

“I have considered all the facts and circumstances which are the basis of instant proceedings and have given my findings thereon in the order dated 3 March 2014 and my findings in the instant proceedings remain the same,” Sebi whole time member Rajeev Kumar Agarwal said in the order.

Ordering suspension of Almondz’ registration certificate for six months, Agarwal said that “the effect and consequence of suspension of the certificate of registration of Almondz will be substantially the same as that of the directions issued against it vide order dated 3 March 2014”.

“Considering the same, I direct that the suspension of certificate of Almondz for a period of six months shall run concurrently with the directions issued against it vide order dated 3 March 2014,” he added. PTI