IPO scam accused agrees to pay Rs 1 cr penalty on SC orders

Dhaval Mehta , the brain behind the IPO scam in companies like Suzlon Energy and IDFC, on Wednesday agreed in the Supreme Court to deposit Rs 10000000 penalty imposed on him by the market regulator SEBI.Counsels appearing for Mehta, whose alleged role in the scam shook the market in 2006, informed a bench headed by the Chief Justice that following its direction he would submit Rs 10000000 penalty imposed by it.He agreed to deposit the money as the apex Court had directed him to pay the penalty as a condition for hearing his plea against SEBI orders, banning him from trading for 2 years.Mehta has challenged the order of Securities Appellate Tribunal, which upheld SEBI's decision. Securities and Exchange Board of India had barred Mehta after it found that he, along with a non-banking company Ashmi Financial Consultancy Private Limited , had booked shares in the IPOs of Suzlon Energy and IDFC through fictitious demat accounts in the names of friends and relatives sharing common addresses.The market regulator had on October 21, 2008 held Mehta guilty of violating Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 as well as Disclosure and Investor Protection Guidelines SEBI had found that Mehta and Ashmi had earned about Rs 1.440000000 from 3,870 and 719 applications in IPOs of Suzlon and IDFC respectively, depriving retail individual investors from getting shares.It had also asked Mehta to pay Rs 7200000 along with 10% interest from August 12, 2008, the date of listing of IDFC IPO, till the date of actual disgorgement within 45 days of the passing of the order.According to the SEBI's findings, Mehta along with the firm had opened various demat accounts in fictitious and benami names and had filed large number of applications in IPOs.