Helios & Matheson fined Rs50 lakh by SEBI for financial irregularities; vMoksha co-founder also penalised

H&M was investigated for making false announcements to influence the stock price and hiding information about acquisition of vMoksha

The Securities and Exchange Board (SEBI) of India has finally imposed a Rs50 lakh penalty on controversial Helios and Matheson (H&M) Information Technology, which has long been under the scrutiny of regulators for alleged financial irregularities.

The SEBI order was issued on 31 January 2011 and the company reported the matter of the fine to the Bombay Stock Exchange (BSE) on Friday. The issue mainly concerns some fake and favourable announcements that the company made to the stock exchange in order to influence the movement of the stock price.

SEBI had said in a show-cause notice to the company that "H&M had made various favourable corporate announcements during the investigation period, that is about the issue of bonus shares, dividend, and declared favourable unaudited quarterly results, etc., besides the announcement of acquiring three entities of vMoksha Technologies Pvt Ltd." SEBI also charged the company with not disclosing the status of the profitability of vMoksha companies that it allegedly acquired.

Incidentally, Rajeev Sawhney, a co-founder of vMoksha Technologies, has been fighting a relentless battle, even knocking on the doors of various regulators, including SEBI and the Reserve Bank of India (RBI), as well as the Ministry of Corporate Affairs, to expose dubious issues over the acquisition of vMoksha.

The company levelled counter charges of 'insider trading' against Mr Sawhney and this was also investigated by SEBI. Interestingly, on the same day that SEBI issued orders against H&M, it also passed orders against Mr Sawhney and fined him Rs 25 lakh.

H&M has filed winding up proceedings against vMoksha in Bengaluru and there is a separate arbitration proceeding pending between H&M and vMoksha which has been delayed due to the death of the arbitrator and the lawyer.

SEBI's order says that H&M "failed to make announcements/ disclosures with regard to price-sensitive information" and "had not informed the stock exchange about the interim developments such as (the fact that) its attempt to acquire three vMoksha companies had not materialised in the stipulated time period, i.e. within 120 days as specified in the SPA (share purchase agreement) and the judicial/arbitration proceedings which started in relation to the same".

H&M was under the scanner of the Enforcement Directorate (ED) in March 2008 and raids were conducted at the company's headquarters in Chennai. Moneylife learned that the raids were based on investigations by the RBI which revealed foreign exchange violations in the vMoksha deal and the reports were given to the ED in November 2007.

Moneylife has also reported about financial irregularities in the acquisition of vMoksha by H&M. The battle started in 2005, when H&M announced a $19 million buyout of vMoksha, co-founded by Mr Sawhney and Pawan Kumar (former CEO of the controversial DSQ Software). Mr Sawhney put in the money and Mr Kumar managed the operations.

Mr Sawhney realised that he had been kept in the dark about many aspects of the deal. For instance, he found that instead of receiving $19 million, a bank account had been 'fraudulently' opened with the State Bank of Mauritius in the name of vMoksha that was used to borrow US$13.5 million with the help of a fake board sanction and some false entries. That money was remitted to H&M ostensibly for subscription of redeemable preference shares on 28 June 2005.  (Read: Helios & Matheson under the scanner)

H&M has also informed the BSE that it plans to appeal to the Securities Appellate Tribunal (SAT) against the SEBI order. Mr Sawhney has also said that he will appeal against the SEBI order against him.


Health insurance premium doubles to Rs7,800 crore

Payment towards health insurance claims by insurance firms rose by about 82.5% to Rs7,456 crore last year over 2008-09, according to data released by Insurance Information Bureau (IIB)

New Delhi: Boosted by rising number of customers, premium collection by health insurance firms almost doubled to Rs7,803 crore in the last fiscal from Rs3,976 crore in 2008-09, even as claim payments shot up, reports PTI.

Meanwhile, payment towards claim settlements by insurance firms rose by about 82.5% to Rs7,456 crore last year over 2008-09, as per the data released by Insurance Information Bureau (IIB).

Similarly, the number of policy holders too increased to 68,84,687 in the last fiscal from 45,75,725 in 2008-09.

With health insurance portability set to be launched from 1st July, the sector is set to witness increased competition.

The Insurance Regulatory and Development Authority (IRDA) has issued guidelines for health insurance portability, whereby one can switch service providers without compromising on policy terms. The customers are also expected to get well-priced policies and better quality services.

As many as 8,16,793 policy holders in the age group of 41-60 years claimed insurance, followed by 7,87,621 persons in the age bracket of 26-40 years in 2009-10. The data revealed that parents of children below the age of one year made 4,87,288 claims and the firms paid Rs 1,713 crore towards the same.

Further, people suffering from circulatory, digestive, urology, eye and infection problems topped the list of health insurance claimants. A total of 32,63,597 insurance claims were made in the last fiscal.

The IIB said the data is based on information received from third party administrators (TPAs) and insurers.

Besides, three standalone health insurers-Star Health & Allied Insurance, Apollo MUNICH and Max BUPA-number of other players including National Insurance Company, United India and Oriental Insurance and ICICI Lombard are active in this field.


IRDA cancels PNB Principal Insurance Broking licence

Delhi-based public sector lender PNB will also buy out Principal and Berger Paints' stake of 26% and 25%, respectively in a proposed insurance broking company, which also did not get off the ground

New Delhi: The Insurance Regulatory and Development Authority (IRDA) today said it has cancelled the licence of PNB Principal Insurance Broking pursuant to their request for surrender, reports PTI.

"Pursuant to the request made by the broker for surrender of broker licence, the authority hereby cancels the Direct Broker Licence granted to PNB Principal Insurance Broking," IRDA said in a statement.

This is pursuant to the restructuring of the insurance broking business of state-run Punjab National Bank, under which PNB bought out the stake of its two partners.

However, the other local partner Vijaya Bank would remain with the joint venture.

Delhi-based public sector lender PNB will also buy out Principal and Berger Paints' stake of 26% and 25%, respectively in a proposed insurance broking company, which also did not get off the ground.

IRDA said that the shareholders of PNB Principal Insurance Broking applied to surrender its license on 24 November 2010.

IRDA said PNB Principal Insurance Broking would continue to provide service to its clients for the next six months and would "make suitable arrangements with another licensed broker to service the contracts already concluded".


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