The Securities and Exchange Board of India (Sebi) imposed a seven-year ban on Varanium Cloud and its promoter Harshvardhan Sabale from participating in the stock market on Tuesday. This decision was made in connection with alleged misappropriation of funds from the company's Initial Public Offering (IPO).
The regulator also ruled that Sabale must return illegally obtained income amounting to 128.77 crore rupees. Varanium Cloud was required to return 62.51 crore rupees, which were allegedly diverted to its account, and pay 12 percent interest on this amount.
Furthermore, Sabale was restricted from serving as a director or key managerial person in any listed company or intermediary registered with Sebi for seven years. In its final order, Sebi imposed monetary penalties: 20.4 crore rupees on Sabale and 1.3 crore rupees on Varanium Cloud. These fines must be paid within 45 days of the decision being issued.
The regulator also restricted the activities of the broker First Overseas Capital in the stock market for two years due to alleged failure to exercise due diligence and proper care when preparing the company's prospectus.
Sebi stated that 18.98 crore rupees were diverted from Varanium Cloud's IPO proceeds, and 43.53 crore rupees from rights issue proceeds, with these funds being directed to related parties and other entities. Of the total amount of 32.73 crore rupees, Sabale received it, who, according to the order, controlled the movement of the placement funds.
In a 155-page document, Sebi alleged that Varanium Cloud misrepresented financial statements and the prospectus, demonstrated fictitious sales and purchases, provided incorrect data on the share capital structure, made false statements about the use of IPO funds, provided misleading information to investors about acquisitions, and failed to disclose related-party transactions.