Sebi bars Kemrock, 3 individuals from securities market

Sebi bars Kemrock, 3 individuals from securities market

Sebi has barred Kemrock Industries & Exports Ltd and three individuals from the securities market for a period ranging from six months to up to three years for indulging in fraudulent schemes for subscription of GDR issuance by the company.

Kemrock has been banned for three years.

Since the company is under liquidation, the directions are subject to any order passed by the court or tribunal having jurisdiction approving any scheme for the company’s revival or under the resolution plan approved under the Insolvency and Bankruptcy Code.

The individuals who have barred from the securities market are Kalpesh Patel, Mukund Bakshi and Kaushik Bhatt, according to an order passed by Sebi on Wednesday.

The regulator had conducted an investigation with respect to GDR (Global Depository Receipt) issuance by Kemrock during April-May 2010. The company had issued GDRs amounting to USD 50 million.

The entire GDR issue was subscribed by one entity Vintage FZE. It was observed that the subscription amount was paid by Vintage by obtaining a loan from European American Investment Bank AG (EURAM Bank), Sebi said.

As per the order, the company had pledged the entire GDR proceeds as collateral against the loan availed by Vintage from EURAM Bank. The same was carried out through a loan agreement entered between Vintage and EURAM Bank, and a pledge agreement entered between Kemrock and EURAM Bank.

Further, Sebi noted that Patel had signed the pledge agreement on the behalf of the company.

The individuals were the directors on the board of the company during the relevant time of issuance of GDRs and were present in the board meeting held on March 16, 2010 where the pledge agreement was signed, the regulator said.

Hence, “it constrains me to hold that noticees… have in collusion with the company, acted fraudulently… in breach of the provisions of… PFUTP Regulations,” Sebi’s Whole Time Member S K Mohanty said.

PFUTP pertains to Prohibition of Fraudulent and Unfair Trade Practices.

While Patel has been restrained from accessing the securities market for two years, Bakshi and Bhatt have been banned for six months each.

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