IPO scam: Sebi bans Zenet for a yr

“Zenet Software shall disgorge the unlawful gains of Rs 22,05,86,584. It shall also pay Rs 8,82,34,634 being the simple interest of 8 per cent per annum for five years (2004-09) on unlawful gains of Rs 22,05,86,584,” the Sebi order said. “Thus,Zenet shall pay a total amount of Rs 30,88,21,218 within 45 days from the date of this order,” it added.

The IPO scam refers to cornering of shares reserved for retail investors in the public issues of 12 public offers,including IL&FS,TCS,Yes Bank,Shoppers’ Stop,through fictitious multiple demat accounts.

Citing examples,Sebi said had Zenet applied for IPO shares in individual capacity,it could have got an allotment of 266 IDFC shares or 214 NTPC shares. But,by making applications through two key operators and providing finance to them for making IPO applications,Zenet was able to corner 73,150 IDFC and 7,48,546 NTPC shares.

Sebi said it noticed certain irregularities in the transactions of shares issued through IPOs,made in 2003-05,before their listing on exchanges. In an ex-parte order on April 27,2006,it had barred Zenet and four other firms (which have since amalagamated with Zenet) from the securities market.

The regulator had said these companies had acted as financiers the two key operators — Roopalben Panchal and Sugandh Estates and Investments– to enable them to apply for shares in the retail category in the 12 IPOs. Later,these key operators transferred the shares to the demat accounts of these companies,it added.

Sebi said,”the noticees (Zenet and the four companies) together provided a sum of Rs 200 crore to the key operators for making applications in 12 IPOs.” Besides,it said Zenet received more than 7.48 lakh shares of NTPC for about Rs 4.64 crore but sold them for over Rs 5.65 crore,thereby making an “unlawful gain” of over Rs 1 crore.

It added there were similar gains make by Zenet and four other companies in respect of other IPOs.