SEBI orders this SME to return the money it raised through its IPO

In an unprecedented move, market regulator SEBI on Tuesday (December 3) asked Trafiksol ITS Technologies to refund the money paid by investors towards subscribing to the company’s IPO. Also, SEBI asked Trafiksol to return the interest amount accrued on the money back to the investors who were allotted the company’s shares in the said IPO. Interesting to note that Trafiksol’s IPO was oversubscribed 345 times.

According to SEBI, Trafiksol raised ₹45 crore through its IPO and post the closure of the IPO, the market regulator received a complaint which alleged that the objects of the issue included the purchase of software valued at nearly ₹18 crore from a vendor which, inter alia, had questionable financials and failed to file its annual financial statements with the Ministry of Corporate Affairs (MCA).

In view of the above complaint, BSE in consultation with SEBI deferred the listing of the shares of Trafiksol. After receiving the complaint and keeping the listing of shares of Trafiksol in abeyance, SEBI passed an interim ex-parte order, directing an investigation to be undertaken. The interim order also directed BSE to maintain the proceeds of the issue in an interest-bearing account till further directions.

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SEBI’s investigation into the matter found an intent of diversion of funds through misleading objects of the issue. SEBI also found misstatement of financial statements and concealment of material facts in the IPO prospectus.

After sending a show-cause notice to the company and giving it personal hearings, SEBI today passed an order directing Trafiksol to return the money paid by investors towards subscribing to the company’s IPO along with the interest accrued on it within one week.

Once the money is credited to the bank account of the applicants, the depositories are directed to transfer the shares of the company which have been allotted pursuant to the IPO, to a separate demat account opened in the name of the company. SEBI has directed Trafiksol to take appropriate steps for cancelling the shares which have been so transferred to the account.

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