Sebi fines 6 merchant banks for lapses in CARE IPO

The Securities and Exchange Board of India (Sebi) has penalised six merchant bankers — Kotak Mahindra Capital Company, Edelweiss Financial Services, IDBI Capital Market Services, DSP Merrill Lynch, ICICI Securities and SBI Capital Markets — for lapses during the public offer of rating firm Credit Analysis and Research (CARE) two years ago. The six merchant banks have been asked to pay a fine of Rs 10000000 — the maximum penalty applicable for violation of disclosure related norms in IPO documents — within 45 days for “suppression of material facts” in the IPO of CARE. “While making disclosures in the Red Herring Prospectus, the book running lead managers (BRLMs) cannot pick and choose some material facts that they prefer to disclose and suppress some material facts. If material facts are suppressed or distorted as in the extant case, the very safety and integrity of the securities market would become a cause of concern for the regulators and the investors,” the Sebi order said.