SEBI Imposes Fine On PVR Murthy In GDR Manipulation Of Birla Cotsyn, Zenith Birla

SEBI on Tuesday levied fines totalling Rs 20 lakh on PVR Murthy in the manipulation of global depository receipts of Birla Cotsyn (India) Ltd. and Zenith Birla (India) Ltd. (now known as Zenith Steel Pipes & Industries).

In two separate orders, the regulator slapped a fine of Rs 10 lakh each on PVR Murthy.

The order came after the Securities Appellate Tribunal in its ruling on November 2022, set aside two different SEBI orders passed on May 2022 and June 2022, in the matter of Birla Cotsyn and Zenith Birla and remanded the matter back to the markets watchdog and pass a fresh one.

The regulator conducted its investigations into the alleged irregularities in the GDR of Birla Cotsyn (India) Ltd. and Zenith Birla (India) Ltd. during the period February-April 2010 and May-June 2010, respectively.

The regulator found in its investigations that the GDR issue would not have been subscribed had ZBIL and BCIL not given any such security towards the loan taken by Vintage and the entire scheme involving entering into a pledge agreement.

By making corporate announcements that the GDRs were fully subscribed of both companies without disclosing the arrangement to the investors resulted in the publication of misleading news to the bourses, which contained information in a distorted manner so as to influence the decision of the investors by creating a picture that the issue was genuinely subscribed.

Hence, Murthy being a director and authorized signatory of BCIL and ZBIL, has acted fraudulently along with the companies and is in breach of the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules.

Earlier, in two different orders, SEBI levied penalties totaling Rs 40 lakh on Murthy in the GDR manipulation case of BCIL and ZBIL.

The investigation, prima facie, revealed that BCIL and ZBIL had issued GDRs and the said issue was subscribed by only one entity Vintage FZE (now known as Alta Vista International FZE).

It was also observed that the subscription amount was paid by Vintage by obtaining a loan from European American Investment Bank AG by entering into loan agreement on February 2010 and May 2010, respectively.

And Murthy was on the boards of directors of BCIL and ZBIL during the entire process of issue of GDRs. He was part of the fraudulent scheme and arrangement of BCIL and ZBIL along with the other directors of the firm, including Yashovardhan Birla in facilitating the subscription of its own GDR, SEBI said in the order.

In a separate order, SEBI slapped fines totalling Rs 1.63 crore on 31 entities for manipulating the share prices of VB Industries Ltd.

The regulator slapped fines in the range of Rs 5-6 lakh on 31 entities.

The order came after SEBI received complaints relating to several SMSes which were circulated with the recommendation of buying shares of VBIL.

Thereafter, the regulator conducted an investigation into the scrip of VBIL for April-May 2018.