The capital market watchdog has also issued a show cause notice to FOCL seeking its response on why an enquiry should not be initiated against the company and penalty be not imposed on it.
“Keeping in view the prima facie observations and findings recorded in the preceding paragraphs and in order to protect the integrity of the securities market, I, in exercise of the powers conferred upon me under Sections 11, 11(4) and 11B(1) read with Section 19 of the SEBI Act, 1992, pending adjudication of the allegations against the Noticee detailed in this Order, hereby debar the Noticee from taking any new mandate in relation to the business of issue management either by making arrangements regarding selling, buying or subscribing to securities or acting as manager, consultant, adviser or rendering corporate advisory service in relation to such issue management, until further order,” Sebi ruled in its 33-page order.
The regulator in its prima facie observations found that FOCL had violated various regulations including not maintaining the minimum net worth requirement for six consecutive years from the year 2018-19, knowingly submitted false and misleading statement to Sebi, and had ventured into business other than the that in the securities market and not disclosing its track record in according with the Sebi circular.
On the issue of false and misleading information, the regulator noted at least half-a-dozen cases which included its submissions of the availability of the statutory auditor, loan vis-à-vis investment in property development business, misleading information regarding the Compliance Officer and company’s net worth of for FYs 2021-22 and 2022-23.
FOCL was also found in non-compliance with MB certification requirements. “A merchant banker is required to ensure that at least two KMPs have certification from NISM for “NISM-Series-IX: Merchant Banking Certification Examination”. However, it was found that none of the KMPs had the requisite certification between April 01, 2022 (beginning of the inspection period) and August 05, 2023 and only one KMP had the certification thereafter,” the 33-page order said.FOCL has been given 21 days time to file its reply/objections.The interim order was pronounced by Ashwani Bhatia, a Whole Time Member in Sebi.
Also Read: F&O cannot be a national pastime, says Sebi member Ashwani Bhatia
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
