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Time of India
26-05-2025
- Business
- Time of India
Sebi fines MCX Rs 25 lakh over lapses in disclosing payments
Sebi fines MCX NEW DELHI: The Securities and Exchange Board of India (SEBI) on Monday imposed a Rs 25 lakh penalty on the Multi Commodity Exchange of India (MCX) for failing to adequately disclose substantial payments made to 63 Moons Technologies (formerly known as Financial Technologies India Ltd). The penalty, which must be paid within 45 days, stems from insufficient transparency in MCX's disclosures related to payments for trading software services. The matter revolves around continued payments to 63 Moons after delays in implementing a new trading platform developed by Tata Consultancy Services (TCS). MCX had originally signed a software agreement with 63 Moons in 2003, when the latter was the sole owner of the exchange. Although MCX decided in 2020 to transition to a new platform- Commodity Derivatives Platform (CDP)- built by TCS, project delays led to extended reliance on 63 Moons' services at significantly higher costs. According to Sebi's findings, between October 2022 and June 2023, MCX paid Rs 222 crore to 63 Moons, including Rs 60 crore in the October–December 2022 quarter and Rs 81 crore in each of the next two quarters. These figures were not disclosed in real time, despite the fact that they far exceeded earlier payments and had a major bearing on the company's profitability. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Giao dịch xu hướng AUD/USD? IC Markets Đăng ký Undo Sebi noted that the total amount paid during these three quarters was nearly double MCX's net profit of Rs 118 crore in FY 2021–22. However, the full extent of these payments was only publicly disclosed in January 2023, well after the fact. 'I note that the quarterly payments made by MCX to 63 Moons for three quarters between October 2022 and June 2023, which totalled Rs 222 crore, were much larger than the annual profit of MCX for the previous financial year,' said Sebi whole time member Ashwani Bhatia. 'This information was material... and warranted public disclosure under the LODR Regulations," he added. Sebi noted that the failure to disclose such significant financial outflows in a timely manner constituted a violation of the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, thereby justifying the monetary penalty. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
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Business Standard
26-05-2025
- Business
- Business Standard
Sebi imposes ₹25 lakh penalty on MCX for disclosure lapses on payments
The Securities and Exchange Board of India (Sebi) has imposed a penalty of ₹25 lakh on the Multi Commodity Exchange (MCX) for alleged lapses in disclosures regarding quarterly payments to 63 moons for extending the Commodity Derivative Platform (CDP) before the shift to the platform developed by Tata Consultancy Services (TCS). While the market regulator had dropped several other allegations stated in the show-cause notice issued in October 2023 against the exchange and its management, Sebi has confirmed the violations of disclosure norms. MCX paid ₹222 crore for three quarters between October 2022 and June 2023 to 63 moons for continuing services after the end date of the agreement, while the TCS platform was not ready. Sebi noted that these payments were not disclosed by MCX to the public in press releases or notes to the quarterly financial results, resulting in delayed disclosures. The amount paid to 63 moons for the three quarters exceeded the exchange's annual profit of ₹118 crore in the previous financial year (FY21-22). MCX had cited the uncertainty surrounding the shift to the new CDP due to prevailing Covid restrictions and the complexity of the project. The Sebi order also considered that any coercive legal action by MCX against 63 moons could have led to 63 moons abruptly stopping services after the end date of the agreement, which could have jeopardised the continuity of operations. 'Faced with a dilemma — damned if you do, damned if you don't — MCX went ahead with the choice of a temporary extension of services, for which 63 moons extracted its pound of flesh. While the losses to MCX were substantial, it had to be ensured, at any cost, that the exchange and its Clearing Corporation (CC) functioned without any disruptions,' noted Sebi whole-time member Ashwani Bhatia in the order.
Business Standard
14-05-2025
- Business
- Business Standard
Sebi bars Varyaa Creations, freezes promoters' shares over IPO misuse
The Securities and Exchange Board of India (Sebi) on Wednesday debarred Varyaa Creations, a company listed on the small and medium enterprise (SME) platform of the BSE, from the securities market for the alleged diversion of funds raised through its initial public offering (IPO). The holdings of seven promoter group members have also been frozen until further directions. Sebi's investigation revealed that over 71 per cent of the IPO proceeds were transferred to third parties under the guise of issue-related expenses, on the instruction of the lead manager. The market regulator has also restrained Inventure Merchant Banking Services, the lead manager for the IPO, from taking up any new assignment. This is the second merchant banker, after First Overseas Capital, to be restricted this month by Sebi for lapses in SME IPOs. Sebi noted that the modus operandi in both cases was the same. The company, engaged in manufacturing and wholesale trading of jewellery, was listed on the SME platform of the BSE in April 2024 and raised ₹20 crore. Sebi's probe found that the company had access to only about 30 per cent of the issue proceeds. Further, the company had also planned to raise ₹35 crore through a rights issue—an amount significantly higher than the ₹20 crore raised through the IPO, and within just 13 months of the initial fundraising. Sebi stated that such a fundraise cannot be permitted while the investigation is ongoing. The regulator noted that, as the lock-in period for a portion of the promoters' shareholding was set to expire on May 14, immediate action was necessary to prevent them from offloading their shares. Highlighting several instances of fund diversion in the SME segment, Sebi whole-time member Ashwani Bhatia remarked: 'The task often feels Sisyphean—but when confronted with facts that strike at the very heart of investor protection and market integrity, Sebi's hands are forced. Inaction is not an option.' Sebi also advised the BSE and NSE to exercise greater care and diligence while permitting listings, stating that such instances are not in the interest of investors.
Business Mayor
06-05-2025
- Business
- Business Mayor
Sebi bans Synoptics Tech, promoters from securities market for IPO fund diversion
In an interim order, the regulator, said 'the examination reveal a well laid out plan of the company (Synoptics Technologies) and the lead manager, FOCL (First Overseas Capital Ltd), to siphon away funds raised in the IPO'. 'Acting under the authority granted by an escrow agreement, FOCL prima facie appears to have issued instructions to the banker to the issue for transfer of funds under the guise of meeting issue-related expenses. 'The amount transferred ostensibly for meeting 'Issue management fees, underwriting and selling commissions, registrar fees, and other IPO related expenses' was Rs 19 crore and grossly disproportionate to the Rs 80 lakh disclosed as issue expenses in the RHP (Red Herring Prospectus),' Sebi's whole time member Ashwani Bhatia said in the order. As per the order, the amount accounted for more than 54 per cent of the total proceeds raised by Synoptics through the fresh issue of shares worth Rs 35.08 crore and 35 per cent of the total issue size (Rs 54.04 crore). The markets watchdog concluded that FOCL, acting in concert with the Synoptics Technologies, siphoned off a substantial portion of the issue proceeds. Accordingly, Sebi directed FOCL not to take up any new assignments relating to merchant banking activities in the securities market till further directions from the regulator. Additionally, in respect of any pending assignments where FOCL is already engaged as a lead manager as on date, the issuer will appoint a monitoring agency to monitor the use of proceeds irrespective of the issue size, the order said. Sebi observed that FOCL, during the period May 1, 2022 to April 30, 2025, undertaken Initial Public Offering (IPO) assignments for 20 companies which listed on SME segment of BSE and NSE. The regulator said it will 'examine the utilisation of funds raised in all these issues to identify whether a similar modus operandi was adopted in any of the other issues managed by FOCL during this period'. Mumbai-based Synoptics Technologies raised Rs 54.04 crore through an Initial Public Offer (IPO) on the SME Platform of NSE in July 2023, and FOCL acted as the lead manager to the issue. The order came after the Securities and Exchange Board of India (Sebi) examined the matter on receiving complaints alleging irregularities in the bidding process following the closure of the IPO.
Mint
06-05-2025
- Business
- Mint
Sebi alleges Synoptics used IPO funds to inflate own stock on market debut
The Securities and Exchange Board of India (Sebi) has uncovered an elaborate scheme under which Synoptics Technologies Ltd (STL) allegedly diverted IPO proceeds to fictitious entities before listing, and using some funds to artificially inflate the company's share price on its market debut. The capital market regulator also barred the merchant banker involved from taking up new initial public offering (IPO) assignments. In a strongly-worded interim order issued on Tuesday, Sebi accused the two entities (the company and the merchant banker) of gross misuse of investor funds, including routing ₹ 2 crore to an individual who used the funds to buy shares of Synoptics on the listing day, thus creating artificial demand. 'It can be clearly concluded that funds transfers were not made to entities with whom STL had entered into agreements," Sebi said in its 6 May order. Also read: Sebi's plan set to derail Metropolitan Stock Exchange's comeback "The explanation regarding deploying funds towards the objects of the issue furnished by the Company becomes untenable. The Company misrepresented all facts to Sebi," the order by Whole Time Member Ashwani Bhatia said. In a first-of-its-kind enforcement action, Sebi also barred the merchant banker, First Overseas Capital Ltd (FOCL), from taking on any new IPO assignments. 'The actions of FOCL in giving instructions for the transfers… are shocking and stunning at the same time," Sebi's order said. 'FOCL, having acted in complete derogation of its role as a merchant banker, cannot be permitted to undertake any fresh public issue assignments, as its continued presence in the market poses a serious risk to investors and the orderly functioning of the capital markets." Synoptics raised ₹ 54.04 crore through a fixed-price SME IPO in July 2023 on NSE Emerge, claiming it would use ₹ 34.58 crore of the fresh issue proceeds for working capital, strategic investments, and general corporate purposes. Also read: Uber's lifeline off the table for BluSmart s EV depreciation becomes key contention But on 12 July, a day before listing, ₹ 19 crore — more than half of the fresh issue proceeds — was withdrawn from the IPO escrow account. This transfer violated the escrow agreement, which clearly barred fund withdrawals before listing and trading approvals. The money was moved on the instruction of FOCL, which claimed it was for 'issue-related expenses," despite Synoptics having disclosed just ₹ 80 lakh as such expenses in its prospectus. Sebi's investigation revealed that the funds were sent to three entities — ABS Tech Services, CN IT Solutions, and Dev Solutions — which did not exist at their stated addresses. The bank accounts receiving the funds were not in the names of these entities, but in the names of unrelated shell companies like Sachiel Exim, Dev Trading, and Transpaacific Shipping and Resources Ltd. All three agreements were unregistered, nearly identical, and structured as refundable deposits rather than strategic investments or working capital advances, Sebi found. Also read: Sahara's shadow: The spectacular unravelling of Subrata Roy The investigation further revealed that Dev Trading, which received ₹ 6 crore, transferred ₹ 2 crore to an individual named Nikhil Rajesh Singh. The next day — 13 July, 2023, the day of listing — Singh bought 1.6 lakh shares of Synoptics, worth ₹ 3.82 crore, at the listing price of ₹ 238 per share. 'It is apparent that a part of IPO proceeds was transferred to Dev Trading which transferred funds to Nikhil Rajesh Singh, who in turn used the funds for buying shares of STL," Sebi observed. In its interim order, Sebi barred Synoptics Technologies and its three promoters (Jatin Shah, Jagmohan Shah, and Janvi Shah) from participating in the securities market until further orders. Furthermore, it also barred FOCL from taking up any new merchant banking assignments, after finding that the banker acted in concert with the company to siphon off substantial portion of the issue proceeds. Sebi also directed issuers of ongoing IPOs being handled by FOCL to appoint an independent Monitoring Agency, even if the issue size is below the usual ₹ 100 crore threshold. The interim order also indicated Sebi's intention to widen its probe into the 20 SME IPOs which FOCL managed between May 2022 and April 2025. 'Sebi shall examine the utilization of funds raised in all these issues to identify whether a similar modus operandi was adopted in any of the other issues managed by FOCL during this period", Bhatia said in the order. The company, its promoters, and FOCL have 21 days to respond, after which Sebi may pass final directions.
