Press Trust of India Market regulator SEBI on Monday imposed a total fine of ₹1.5 crore on ABL Biotechnologies and its CMD Kollenmareth Oomman Isaac for indulging in fraudulent plan with regard to subscription of GDRs.

Individually, the regulator has levied a fine of ₹ 1 crore on Isaac and ₹50 lakh on ABL Biotechnologies (ABL), the Securities and Exchange Board of India said in an order.

A probe by SEBI found that the entities had pre-arranged subscription of global depositary receipts through several agreements.

According to SEBI, ABL had issued GDRs worth $6.68 million on June 20, 2008, which were listed on the Luxembourg Stock Exchange. Clifford Capital Partners was the only entity which had subscribed to the entire issue of GDRs and the subscription amount was paid by Clifford by obtaining a loan from Banco Efisa.

Simultaneously, an account charge agreement was executed between ABL and Banco, by pledging the proceeds of the GDR issue to Banco, it added.

“These agreements enabled Clifford to avail a loan from Banco for subscribing to the GDRs of ABL. Subscription of GDRs of ABL by Clifford was possible through credit the entered into by Clifford with Banco and the account charge agreement entered into by ABL with Banco,” Sebi noted.

Later on June 23, 2008, the company had informed the BSE that at its meeting held on June 20 of the same year, it approved the allotment of GDRs amounting to $6.68 million, which led investors to believe that the said GDR issue was genuinely subscribed by foreign investors. SEBI noted that the company failed to disclose immediately to the BSE about the outcomes of the board meetings held on March 1, 2008 and June 20, 2008.

Further, the company did not inform the BSE of the delisting of the GDRs from the Luxembourg Stock Exchange.

“The manner in which the entire scheme of fraudulent and deceptive scheme (was) planned and executed by the CMD of ABL demonstrates beyond reasonable doubt the manipulative intent to deliberately withhold the critical information to the board of ABL and also to the investors,” SEBI said.

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