PNB Investment Violated Norms; No Further Action Needed: Sebi

Market regulator Sebi today found PNB Investment Services of having violated certain merchant banker norms, but has let off the entity and its MD saying that they have already undergone debarment for over 2 years under an interim order.

PNB Investment Services, a subsidiary of a public sector lender Punjab National Bank, had been charged of failing to make various disclosures as well as incorrect disclosures as a merchant banker to the IPO of Taksheel Solutions Ltd (TSL).

In its final order on Tuesday , Sebi said that "out of 8 charges in the show cause notice and the report, the notice has been found to be non-compliant with regard to 3 charges - with respect to incorrect disclosures regarding arrangements for buy back of shares of TSL, non-disclosure of related party transactions and incorrect disclosures regarding the business overview of TSL in its offer document".

However, Sebi whole time member Rajeev Kumar Agarwal noted in the order that PNB Investment Services "has already undergone debarment since December 28, 2011 till date which has the same effect and consequence of suspension of the certificate of its registration".

"I, therefore, do not think this case fit for any further action such as suspension of certificate of registration of the noticee," he added.

The Securities and Exchange Board of India (Sebi) had in a December 2011 interim order barred PNB Investment Services and its CEO and managing director L P Agarwal from taking up any fresh assignment or involve in any new issue of capital including IPO, follow on issue in the securities market till further directions.

"...the directions issued vide the interim order dated December 28, 2011 read with the confirmatory order dated September 7, 2012 would not continue further against the notice (PNB Investment Services) and L P Agarwal," Sebi said in the order on tuesday.

Taksheel Solutions had made a Initial Public Offer (IPO) of 55 lakh shares during the period September 29, 2011 to October 4, 2011. PNB Investment Services had acted as the Book Running Lead Manager (BRLM) for the IPO.

A Sebi show cause notice had charged that PNB Investment Services had failed to make disclosures in the offer document with regard to cancellation of certain land allotted to TSL, utilisation of IPO proceeds for repayment of ICDs raised by the firm and related party transactions, among others.