SEBI Fines Aksh Optifibre And Its Directors Rs 10.75 Crore

The Securities & Exchange Board of India (SEBI) has imposed a total fine of Rs 10.75 crore on Aksh Optifibre and its five directors, namely Kailash S Chaudhary, P F Sundesha, B R Rakhecha, Narendra Kumbhat and Arun Sood.

Each of these directors face a fine in the range of Rs 10 lakh to Rs 20 lakh each in a matter related to indulging in manipulation while issuing global depository receipts (GDR), after a SEBI investigation.

According to the SEBI, the company had issued 1.17 million GDRs worth USD 25 million in September 2010.

The SEBI investigation revealed that the entire 1.17 million GDRs were subscribed by merely a single entity, namely Vintage FZE, which is presently known as Alta Vista International FZE, after obtaining a loan from a European American Investment Bank AG (EURAM Bank).

Also, the company was found to have acted as guarantor and deposited the entire GDR proceeds received from Vintage FZE with the EURAM Bank as security against the loan for subscribing to the GDRs issued by the company.

The SEBI investigation also revealed that the company had also failed to make requisite disclosures pertaining to the GDR issue.

The company failed to make any disclosures regarding the pledge agreement entered into with EURAM Bank for subscription of GDRs, delisting of GDRs on the Luxembourg Stock Exchange.

It also failed to inform stock exchanges about termination of its GDR facility by the global depository, Bank of New York Mellon, which happened to be price sensitive information.

The SEBI order stated that the scheme of arrangement of Aksh allotting its GDR issue to Vintage along with false and misleading corporate announcements led to the conclusion that it was executed in a fraudulent manner.