ICICI Securities Limited has settled a regulatory case with the Securities and Exchange Board of India (SEBI), agreeing to pay ₹69.82 lakh to resolve allegations of compliance violations.
SEBI’s inspection of ICICI Securities’ operations took place from September 22 to September 23, 2022. This routine check was aimed at ensuring adherence to the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations), and the SEBI (Merchant Bankers) Regulations, 1992 (MB Regulations).
Regulation 24(3) of the ICDR Regulations requires merchant bankers to provide adequate documentary evidence to substantiate the objectives of a public issue. Similarly, Regulation 13 of the MB Regulations, in conjunction with Clause 4 of Schedule III, mandates the accuracy and reliability of site visit reports.
The inspection report highlighted several compliance issues related to ICICI Securities’ due diligence processes. Notable problems included inadequacies in site visit reports and insufficient documentary evidence for the objectives of public issues managed by the company. Discrepancies were also found between the Draft Red Herring Prospectus (DRHP) and related news articles about the objectives of certain issues.
Following these findings, ICICI Securities submitted a settlement application to SEBI on November 9, 2023, aiming to resolve the matter without lengthy litigation. SEBI’s Internal Committee recommended a settlement amount of ₹69,82,500, which was subsequently approved by the High Powered Advisory Committee (HPAC) and SEBI’s Panel of Whole Time Members (WTMs).
ICICI Securities agreed to this settlement amount and committed to taking corrective actions against any responsible officers, with the obligation to inform SEBI of these actions.
As part of a broader restructuring plan, ICICI Securities is also pursuing delisting from the stock exchanges. Under the proposed scheme, shareholders of ICICI Securities will receive 67 shares of ICICI Bank for every 100 shares held.
SEBI’s settlement order confirms the resolution of the regulatory issues but retains the authority to revisit the terms if any future discrepancies or breaches are discovered.
Posted and reproduced in Public Interest by
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