SEBI bars Trafiksol ITS, its promoters from securities market for 1 year; imposes Rs 1.05 crore fine

Markets regulator Sebi on Friday barred Trafiksol ITS Technologies Ltd and its promoterdirectors Jitendra Das and Poonam Das from accessing the securities market for one year and imposed penalties totalling Rs 105 crore on them over irregularities related to the companys IPOTrafiksol was fined Rs 30 lakh Jitendra Das Rs 50 lakh and Poonam Das Rs 25 lakh with the regulator directing them to pay the penalties within 45 days according to Sebis final orderThe proceedings followed complaints received by Sebi and BSE after Trafiksols SME IPO was subscribed 34565 times in September 2024 The issue comprised a fresh offering of 6410 lakh shares in the price band of Rs 6670 and raised Rs 4487 crore at the upper end of the bandOf the IPO proceeds Rs 1770 crore was proposed to be used for purchasing softwareThe companys shares were scheduled to be listed on September 17 2024 However concerns were raised over the proposed software vendor Oasis Corpcare from which Trafiksol had obtained a quotation The complaint questioned the vendors capability to execute the proposed contractFollowing the complaints BSE in consultation with Sebi deferred the listing of the companys shares Subsequently in an interim order passed in October 2024 the markets regulator directed BSE to ensure that the IPO proceeds were placed in an interestbearing escrow account until further directionsSebi also ordered a detailed investigation into the matterIn its 85page order Sebi found multiple and serious violations in connection with the proposed public issue including issues relating to financial disclosures issuerelated expenditure and the proposed deployment of IPO proceedsThe financial disclosures overstated the scale of Trafiksols operations through unsupported yearend recognition of unbilled revenue and salepurchase transactions with Limco and Ishira The manner in which these entities were presented in the customer and supplier disclosures also obscured the true extent and concentration of the companys dealings with them Sebi said in its orderAlso material issuerelated expenditure was not appropriately disclosed while a financial relationship giving rise to a potential conflict with the merchant banker was omitted from the DRHP the regulator pointed outSebi also flagged the Oasis quotation as a particularly serious violation saying a substantial portion of the IPO proceeds was proposed to be deployed on the basis of a fabricated quotationThe conduct of the promoters especially Jitendra Das in relation to the Oasis quotation was particularly egregious A substantial portion of the issue proceeds was proposed to be deployed based on a fabricated quotation obtained from an entity lacking credible technical and operational capability the regulator saidSuch conduct falls severely short of the standards of diligence integrity and responsible stewardship expected from the promoters of an issuer seeking to access public capital it addedSebi said Jitendra Das was directly involved in key aspects of the misconduct including procuring the fabricated Oasis quotation Poonam Das role principally stemmed from her failure to exercise due diligence while signing the relevant documentsAs disclosed in the prospectus Jitendra Das also serves as the chairman and managing director of the company while Poonam Das serves as its wholetime director They are also promoters of the companyAccordingly Sebi restrained all the three entities from accessing the securities market for one year and imposed penalties on themNoticees Nos 1 2 and 3 are restrained from accessing the securities market and further prohibited from buying selling or otherwise dealing in securities directly or indirectly or being associated with the securities market in any manner whatsoever for a period of one year the regulator saidThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever