SEBI fines Winsome Textile Industries Rs 72 crore for fraudulent scheme
On December 15, market regulator SEBI fined Winsome Textile Industries Limited, the company’s director, and two others over Rs 72 crore ($10.82 million) for defrauding investors.
SEBI ruled that Winsome Textiles’ issuance of global depository receipts to investors was fraudulent because it stated that the full consideration for GDRs had been received when it had not, ET Bureau reported. As well as the business itself, SEBI fined company directors Ashish Bagrodia, Manish Bagrodia, and Satish Girotra for the violation.
“Winsome caused the investors in the securities market in India to believe that the full consideration for GDRs had been received by it which was not true and thereby, induced the investors in India to deal in securities, and committed fraud on the investors in India,” SEBI said in a statement, the Press Trust of India reported.
Winsome Textiles has issued 1.29 million GDRs with a value to $9.99 million on March 31, 2011. The issue was managed by Pan Asia Advisors Ltd of which Arun Panchariya was the managing director.
SEBI’s investigation found that Vintage FZE was the sole subscriber of the GDR issue with Mukesh Chauradiya as Vintage’s managing director and Panchariya as its 100% beneficiary. Vintage had got a loan from EURAM Bank to enable it to be able to subscribe to the issue. For Vintage’s loan, Winsome Textiles had pledged the GDR proceeds as collateral.
As well as the fine, SEBI has also barred Winsome, its three directors, Vintage FZE, Arun Panchariya, Mukesh Chauradiya, Pan Asia Advisors, and seven funds from the securities market for different periods of time. SEBI stated that the directors had also acted as a party to the fraudulent GDR scheme.
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