SEBI orders probe into Vaswani IPO; blocks listing
28 May 2011
After stopping the listing of securities sponge iron producer Vaswani Industries on 13 May, the Securities and Exchange Board of India (SEBI) said this week that the company's initial public offering of shares, which closed on 3 May, would be probed for irregularities in subscription.
The market regulator says subscriptions in the qualified institutional and high net worth categories were artificially inflated. "Certain applications were submitted to artificially inflate the subscriptions in QIB and HNI category to attract and mislead investors," SEBI said in a statement last Thursday.
"Post the closure of the issue, the same applications are being withdrawn by way of stop payment, stop allotment, cheque return, wrong cheque dates, etc," it added.
Alleging that this was a "pre-planned move" by the promoters, lead managers and other operators, SEBI said it would complete its investigations withing 30 days.
The company, its promoters, directors and intermediaries have been asked by SEBI to cooperate in the investigations.
Investors should be given an exit option so that securities allotted to them during the IPO can be withdrawn, before permitting the listing, the regulator added.
