Sebi slaps Rs 1.5 cr fine on a individual in IPO fraud case

Budhwani was also allegedly involved in manipulative activities related to Intial Public Offers (IPOs) of IL&FS, IDFC, Shoppers Stop, MSP Steel and Power, SPL Industries, Provogue, Tata Consultancy Services, Gateway Distriparks, Gokuldas Exports, Nectar Lifesciences, Sasken Communication Technologies.

Sebi said Budhwani acted as key operator in concert with certain other entities and was involved in the scheme of cornering of shares in the IPOs.

"...the noticee had indulged in fraudulent and manipulative activities and employed deceptive device and scheme to corner the shares reserved for retail individual investors in the aforesaid 13 IPOs with the intention to defraud retail individual investors," Sebi said in its order.

A Sebi probe in shares of certain companies during their IPOs between 2003 and 2005 had found that certain entities had opened large number of demat accounts and bank accounts which were in the names of fictitious persons or were benami.

The entities had purchased shares of various companies in the IPOs by making applications in fictitious names with each application being of a value so as to make it eligible for allotment under the retail category.

Following the allotment, the shares from such fictitious allottees were transferred in the demat account of key operators like Budhwani before the listing on stock exchanges, Sebi said.

The key operators then transferred the shares through off

... contd.