The Securities and Exchange Board of India (SEBI) announced on Thursday that it plans to refer violation of rules in the issue of initial public offers to the Enforcement Directorate for foreign exchange violations, and to the income tax department in case the use of untaxed black money during such transactions.
The market regulator's latest move comes after it banned seven companies from raising funds on the bourses on Wednesday, after it found they had violated IPO norms and misused the funds thus garnered.
SEBI will take some ''immediate measures'' following its investigation into the seven IPOs, chairman U K Sinha said.
''I am shocked at the audacity of the perpetrators of this offence,'' Sinha said in an interview to Bloomberg UTV. ''While the review of the initial public offer process may take some time, we will come out with some immediate measures in light of the learning we made from the investigations.''
SEBI has also decided to review the entire IPO process and look into sudden volatility of stocks on the day of listing, as happened with some of the seven banned companies.
These companies were indicted for misuse of IPO proceeds, pricing irregularities, inadequate disclosure of information and rigging prices on the day of listing. All of these companies had tapped the capital market in the last six months and had raised approximately Rs450 crore through small issues. (See: SEBI bans seven companies from issuing IPOs)
Action has also been initiated against over 100 entities in possibly the largest crackdown on rogue elements in recent years. Sinha said this would send a message to everybody that they should not be meddling with the rules.