Sebi slaps Rs 10 lakh fine on individual in GDR manipulation case

The fine has been imposed on Mukesh Chauradiya, who was Managing Director (MD) at Vintage. As per the Sebi order, Vintage availed a loan of USD 13.24 million from Euram Bank (European American Investment Bank AG) for payment of subscription amount for GDR issue of Winsome, and signed a loan agreement dated March 22, 2011 with the lender.

Markets regulator Sebi has slapped a penalty of Rs 10 lakh on an individual for indulging in fraudulent and deceptive schemes for subscription of GDR issuance by Winsome Yarns Ltd. An investigation was conducted by Sebi with respect to GDR (Global Depository Receipt) issuance by the company during March to April 2011 period.

Vintage FZE now known as Alta Vista International FZE, an entity controlled by Arun Panchariya, was the sole subscriber of Winsome's GDR issue. The fine has been imposed on Mukesh Chauradiya, who was Managing Director (MD) at Vintage.

As per the Sebi order, Vintage availed a loan of USD 13.24 million from Euram Bank (European American Investment Bank AG) for payment of subscription amount for GDR issue of Winsome, and signed a loan agreement dated March 22, 2011 with the lender. Further, Winsome pledged the GDR proceeds as collateral against the loan availed by Vintage and signed a pledge agreement on the same day with the bank, it noted.

Chauradiya was the signatory on the loan agreement signed by Vintage FZE with Euram Bank, as per the order. According to the order, it was found from the evidence on records that Chauradiya signed loan agreements and documents as both authorised signatory and MD. Vintage was fully controlled by Arun Panchariya.

The regulator noted that Chauradiya assisted Panchariya and acted as a party to fraud in collaboration with him in several instances. In view of the long association with Vintage and Panchariya as well as the role played by him in collaboration with Panchariya, Chauradiya cannot escape responsibility for the fraudulent scheme and arrangement for subscription of GDRs by pleading that he was merely an employee, the watchdog said in the order dated July 28.