Fraud: SEBI bars Morepen from market for 1 year

New Delhi: Capital markets regulator SEBI on Tuesday barred Morepen Laboratories from the capital markets for one year for making misleading disclosure about the issuance of global depository receipts (GDRs).

The regulator noticed some arrangement being perpetrated by certain entities in respect of issuance of GDRs and therefore conducted an investigation into such issues of various companies, including Morepen Laboratories, made in March 2003.

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Instead, Morepen made a misleading disclosure to the BSE that the issue of GDRs was successfully subscribed, it added.

In its 47-page order, the regulator said that Morepen made “GDR issue with an arrangement that it pledged the GDR proceeds for the loans availed by the subscribers for subscribing to the GDR issue of Notice no 1 (Morepen) and made false and misleading disclosures.”

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By making such a misleading disclosure, the company has violated PFTUP (Prohibition of Fraudulent and Unfair Trade Practices) norms.

SEBI has prohibited Morepen from “accessing the securities market, directly or indirectly, and also restrained from buying, selling or otherwise dealing in the securities for a period of one year.”

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With regard to the allegation of diversion of funds, Sebi said the company’s audit committee has to monitor the end use of funds raised through public offers and therefore, the committee may look into the correctness of information provided in its annual report and report the same to the company’s board of directors for taking appropriate corrective action, if any.