Sebi slaps Rs 23 lakh penalty on 3 people for misrepresentation of funds

Capital markets regulator Sebi on Wednesday imposed penalties totalling Rs 23 lakh on 3 individuals in a case related to misrepresentation in the financial details of Indian Infotech and Software Ltd

Capital markets regulator Sebi on Wednesday imposed penalties totalling Rs 23 lakh on three individuals in a case related to misrepresentation in the financial details of Indian Infotech and Software Ltd.

In its latest order, the regulator levied a fine of Rs 8 lakh each on Kamal Nayan Sharma and Harish Joshi, and Rs 7 lakh on Mukund Bhardwaj for violating provisions of fraudulent trading, listing conditions and other disclosure lapses.

In an interim order, Sebi had directed the BSE to appoint an independent forensic auditor to verify the misrepresentations, including in financials/business of IISL (Indian Infotech and Software Ltd) and misuse of funds/books of account.

However, it was found that IISL failed to cooperate with the forensic auditor appointed by the BSE.

Sharma and Joshi were directors of IISL during financial year 2015-16, while Bhardwaj was its chief financial officer.

Passing a 34-page order, Securities and exchange board of India (Sebi) said that these individuals are responsible for the failure of IISL to present true and fair financial statements and executing transactions, which were non-genuine in nature resulting in misrepresentation of the financial statements and misuse of accounts of the company which would tantamount to fraud.

The misrepresentations in the financial statements of IISL were not disclosed by the noticees, it added.

The order came after Sebi initiated adjudication proceedings in the matter after examining annual reports of IISL for the financial years 2014-15 and 2015-16. IISL was on the list of 331 suspected shell companies released by corporate affairs ministry in June 2017.