Sebi levies Rs 12 cr fine on Winsome Yarns, its MD in GDR manipulation case

The firm had issued GDRs amounting to USD 13.24 million (around Rs 96 crore) on March 29, 2011. 

It was noted that Vintage FZE, now known as Alta Vista International FZE, was the sole subscriber of GDR issue. For this, Vintage had availed a loan of USD 13.24 million from EURAM Bank for payment of subscription amount. It was found that Winsome pledged the GDR proceeds as collateral against the loan availed by Vintage FZE. Winsome had signed pledge agreement with EURAM Bank. The agreement was signed by managing director of Winsome, Manish Bagrodia. 

In addition, the firm failed to disclose requisite information to the stock exchanges. 

It also failed to prepare its financial statements in accordance with accounting standards. 

For violation of various market norms in the process, Sebi levied a fine of Rs 11 crore on Winsome Yarns and Rs 1 crore on Bagrodia through an order passed on Friday. 

According to an order passed on Monday, the regulator has imposed a fine of Rs 40 lakh on four entities--PMC Fincorp, Raj Kumar Modi, Prabhat Management Services and R R P Management Services-- for their role in creating misleading appearance of trading in PMC's scrip and manipulating the price. 

The penalty has to be paid jointly and severally by them. 

Raj Kumar Modi is PMC's managing director. 

They indulged in fraudulent and unfair trade practices while dealing in securities of PMC. 

The matter pertains to fund transfers made by PMC directly or through Prabhat Management Services and R R P Management Services to 6 entities, who in turn transferred the funds to their respective brokers for settlement of their trades in the scrip of PMC. 

As per a separate order, Capstocks & Securities (India) Pvt. Ltd is facing a fine of Rs 7 lakh for violating several markets norms and the regulator's circulars and directions. 

''The observations as regards mis-utilization of clients' funds and non-settlement of funds and securities of clients, discrepancies in client registration process (KYC and KRA process) and non-recording of client order as found in the case certainly deserve imposition of penalty,'' Sebi said. 

Besides, through separate orders, Sebi levied fine of Rs 12 lakh on Swaran Financial Pvt Ltd, Rs 10.4 lakh on Shiva Commodities, Rs 14.5 lakh on Sarswati Sales Pvt Ltd and Rs 5 lakh on Shree Laxmi Iron and Steel Works for fraudulent trade by creating artificial volume in trading in illiquid stock options on the BSE. 

They have been fined for violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices norms). 

The orders follow inspection of the stock options segment of the BSE carried out between April 1, 2014 to September 30, 2015.