Preliminary investigations by SEBI revealed that Grishma Securities had diverted substantial part of Tijaria Polypipes' IPO proceeds, 'through layered transactions', to certain entities who had allegedly provided an exit to the retail allottees and QIBs
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has declined to revoke a ban restraining Grishma Securities, its directors and chief executive (CEO) from the capital market with regard to alleged irregularities in Tijaria Polypipes' initial public offering (IPO), reports PTI.
In its order, SEBI declined to revoke the ban against the stock broker Grishma Securities and its directors -- Ketan C Shah, Chandrika H Gandhi, Chhabil C Shah -- and its CEO Mihir Ghelani.
"The submissions of Grishma, its directors and CEO do not give any plausible reasoning/explanation for their actions, at this stage," SEBI said.
According to the market regulator, no intervention is called for in either vacating the interim directions or modifying it, with respect to Grishma Securities, its directors and CEO.
In an interim order last year, SEBI had barred Grishma Securities from buying, selling or dealing in any securities, till further directions.
The IPO of Tijaria Polypipes was open from 27-29 September 2011.
SEBI had initiated a probe into the fall in price of Tijaria Polypipes' shares on the first day of its listing, 14 October 2011.
Preliminary investigations revealed that the company had diverted substantial part of the IPO proceeds, 'through layered transactions', to certain entities who had allegedly provided an exit to the retail allottees/Qualified Institutional Buyers (QIBs).
One of the entities Jivraj Zala had traded through Grishma Securities in the shares of Tijaria Polypipes on the listing day.
SEBI alleged that Grishma Securities had allowed Zala to take huge exposure in the shares of Tijaria Polypies at BSE and NSE, which was not "commensurate with his income". It was also prima facie observed that Grishma had manipulated the client ledger of Zala to give an impression that funds were available in his client account on the day of his trading.
SEBI in its order today said investigation in the matter has been completed and appropriate action would be initiated against Grishma, its directors and the CEO.