SAT upholds SEBI's Rs10 lakh fine on Keynote Corporate Services

SAT noted that while the loss caused to investors of Edserv Softsystems cannot be quantified but it was certain that investors, as a whole, incurred huge losses as a result of IPO due to the act of Keynote


The Securities Appellate Tribunal has upheld the Rs10 lakh penalty levied by Securities and Exchange Board of India (SEBI) on Keynote Corporate Services in a matter related to regulatory violations in initial public offering (IPO) of Edserv Softsystems in 2009.


SEBI had found that Keynote as a book running lead manager to the IPO of Edserv Softsystems, had failed to exercise due diligence by not including details of inter-corporate deposits (ICDs) availed by the company in the prospectus, thereby violating prescribed norms.


Accordingly, in January 2012 SEBI slapped a penalty of Rs10 lakh on Keynote, following which, the entity approached SAT challenging the regulator's ruling.


While upholding the penalty on Keynote, the SAT, in an order on 19th February, said that the responsibility of the entity 'was major, since he plays the coordinating role in bringing out IPO and is conceived to be the one who certifies veracity and adequacy of all disclosures...".


It also "had the responsibility of bringing out all relevant facts and to ensure that no material information/ fact is withheld ....And has authority to call for all relevant information from company seeking IPO and is expected to carry out due diligence to bring our truth and adequacy of information in IPO at all stages," SAT said.


"The penalty is, therefore, upheld and appeal against the impugned order is dismissed," it added.


Keynote had failed to mention in the prospectus of Edserv Softsystems that the company had taken ICDs of Rs4 crore as result of which the investors could not make "informed decision" for investing in the IPO.


SAT noted that while the loss caused to investors "cannot be quantified" but it was "certain that investors, as a whole, incurred huge losses as a result of IPO".


Facebook to buy WhatsApp for $19 billion

The WhatsApp buy is Facebook’s biggest acquisition and comes less than two years after Mark Zuckerberg raised $16 billion from its IPO

Social networking company Facebook said it would buy WhatsApp, the fast-growing mobile messaging service for $19 billion in cash and stock.


The deal bolsters the world’s biggest social network by adding the 450 million users of WhatsApp, which will be operated independently with its own board.


It is Facebook’s biggest acquisition and comes less than two years after Mark Zuckerberg’s company raised $16 billion in the richest tech sector public stock offering.


The purchase includes $12 billion in Facebook shares and $4 billion cash. It calls for an additional $3 billion in restricted stock units to be granted to WhatsApp founders and employees that will vest over four years.


“The acquisition supports Facebook and WhatsApp’s shared mission to bring more connectivity and utility to the world by delivering core Internet services efficiently and affordably,” Facebook said in a statement.


Facebook reportedly sought to acquire another hot messaging company, Snapchat, for $3 billion last year.


“WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable,” said Zuckerberg, Facebook founder and chief executive.


“I’ve known (WhatsApp founder) Jan (Koum) for a long time and I’m excited to partner with him and his team to make the world more open and connected.”


WhatsApp is a cross-platform mobile app which allows users to exchange messages without having to pay telecom charges.


“Almost five years ago we started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us,” Koum said in a blog post.


“Today we are announcing a partnership with Facebook that will allow us to continue on that simple mission. Doing this will give WhatsApp the flexibility to grow and expand, while giving me, (co-founder) Brian (Acton), and the rest of our team more time to focus on building a communications service that’s as fast, affordable and personal as possible,”  Koum added.




3 years ago

While the deal is in the premium range, even if the valuation was brought to realistic level, this should drive home a point to the domestic IT companies. Good software engineering pays off. The valuation achieved by our IT companies has taken a decade while the same has been achieved in half the time that too at double the value. Instead of doing some menial job, we should be looking at building things at a larger scale.

Rs10 polymer notes instead of Rs500 & Rs1,000. Something wrong?

Isn’t it more sensible and imperative that instead of Rs10 notes, currency notes of Rs500 and Rs1,000 be issued in polymer, particularly when we know that the elections are around the corner?

In the early part of this month, just a couple of weeks ago, in the Lok Sabha, Minister of State for Finance, Namo Narain Meena, stated that "plastic" notes in the denomination of Rs10 will be introduced on a pilot basis, in the second half of 2014.


Moneylife has, in the past, carried several stories on this subject, right from the introduction of polymer currency notes in Australia, more than 25 years ago, and how, some 23 more countries have since followed this concept, not only to bring a long shelf life to notes but protecting themselves from counterfeiting that is rampant in many parts of the world.


Earlier articles include:


RBI’s experiment with Rs10 polymer notes goes on and on


New polymer rupee notes should replace those printed before 2005!


India is no exception, as the flood of Rs500 and Rs1,000 fake Indian currency notes have been minted and pushed into the Indian market by Pakistan. Irrefutable forensic evidence was also detailed by the Government, and these were published in the Moneylife.


Earlier articles include:

Polymer notes can curb fake currency racket|

Introduction of polymer currency notes has been talked about for quite sometimes, almost one year.  Dr KC Chakrabarty, deputy governor of Reserve Bank of India (RBI), while on a visit to Karnataka, in May last year, mentioned that trials were taking place in selected cities such as Kochi, Mysore, Jaipur, Shimla and Bhubaneshwar. This was widely reported in the press. So, to hear about such a trial measure again, being stated in the Lok Sabha, in an answer to a written question, the matter is confusing, to say the least.


Simply put, we need to get a clear cut answer, from someone in authority like Dr Chakraborty, whether or not such a move has already taken place? And if so, what was the need for making a trial to print Rs10 plastic (polymer) currency notes? These are NOT the ones that are being counterfeited! Does not the government have enough forensic proof to nail Pakistan down and take up the issue with them? Is it not more sensible and imperative that instead of Rs10 notes, currency notes of Rs500 and Rs1,000 be issued in polymer, particularly when we know that the elections are around the corner?


More details of seized fake currencies in circulation have come to be confirmed, and this time, by finance minister, P Chidambaram, while giving a written reply to a question raised in Rajya Sabha! He stated that fake Indian currencies with face value of Rs23.66 crore were seized in 2010; it rose to Rs31.46 crore in 2011, and Rs34.57 crore in 2012. For the first half of 2013, till about June, Rs17.74 crore worth of these fake notes were seized!


In the meantime, in the IT city of Bangalore, the aam aadmi is noticing a strange phenomenon, and that of sudden appearance of crisp, freshly minted (pun not intended, but factual) notes of Rs5 and Rs10 denomination being pushed into circulation! All these are pre-2005 mintage! Where were they before being brought out, strangely, for distribution now? Someone is unloading tonnes of this currency into the market, and how they mysteriously appear, no body knows! But, these are in circulation and aam aadmi has no choice but to accept and pass on!


The other factor is the non-availability of coins. In the past, the metal content of a coin, has been found to be more than the face value of the coin, resulting in collection to melt! Only recently the one rupee coin has started appearing in the market, in reasonable quantities, while, those of 50 paise simply vanished and petty shop keepers were, and still are, happy to push a candy in lieu, when selling items, which are valued fractionally, such as some newspapers that are priced at Rs3.50!


All said and done, one hopes that RBI will review the matter of polymer currency notes, and bring forward the introduction date by brining in these in the denomination of Rs500 and Rs1,000. This will be a great relief to the market, and, in the meantime, it is hoped that the security and customs inspectors take vigilant care from counterfeit notes coming into India, through "friendly" neighbourhood countries!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)




3 years ago

You are quite right. The counterfeitors always go for high denomination notes Not small value.It would justify RBI's cost of plastic notes if we had gone for 100.500 & 1000 rupee notes.Do we have problems of Rs 10/- counterfeited notes ? Maybe RBI has an answer.Or will they rethink it now seeing your article?

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