The Securities and Exchange Board of India (Sebi) has intensified its clampdown on fraudulent activities in the securities market by issuing a stern demand notice to Arun Panchariya, a key figure in the manipulation of Global Depository Receipts (GDRs) at Hiran Orgochem Ltd. Panchariya has been ordered to pay a hefty sum of Rs 26.25 crore, inclusive of recovery charges, for his involvement in the scheme.
This enforcement action follows a July investigation that revealed Panchariya, alongside Mukesh Chauradiya, was responsible for the fraudulent issuance of $10 million worth of GDRs, which represented approximately 4.61 crore equity shares of the Bombay Stock Exchange (BSE)-listed Hiran Orgochem. These receipts were issued without legitimate consideration, a violation that incurred a Rs 25 crore fine for Panchariya and a Rs 20 lakh fine for Chauradiya.
The scheme orchestrated by Panchariya involved securing loans for GDR subscriptions, which were subsequently defaulted upon. The GDRs were then converted into equity shares and sold within the securities market, breaching the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules. Ongoing legal actions are scrutinizing Panchariya's involvement in similar fraudulent activities across different companies.
Sebi's demand notice, issued on Thursday, provides Panchariya with a two-week ultimatum to settle the dues. Should he fail to comply, the regulator has warned of severe consequences, including the seizure of property, attachment of bank accounts, and possible arrest. This move is part of Sebi's broader efforts to maintain the integrity of India's capital markets and deter fraudulent conduct.
The initial fine levied in July, which amounted to Rs 25 crore, remains unpaid, prompting Sebi to take further action against Panchariya and Chauradiya. The regulator's warning highlights the seriousness of the offenses and its commitment to enforcing compliance with securities laws.
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