SEBI to recompute penalty for GDR fraud, USD 6.05 million loss noted

This is a final order by SEBI regarding the penalty amount to be imposed on Arun Panchariya for his role in the fraudulent Global Depository Receipt (GDR) issue by Winsome Yarns Ltd. The order follows remands by the Securities Appellate Tribunal (SAT) to re-examine the quantum of the fine after previous penalties were partially set aside.

Who it concerns: Arun Panchariya (Noticee), Winsome Yarns Ltd. (Company)

What SEBI found or ordered

• SEBI is directed by the SAT to recompute the quantum of the penalty imposed on Arun Panchariya.
• Previous penalties of INR 25 Crore (2020) and INR 15 Crore (2024) were challenged and partially set aside by the SAT.
• The SAT upheld SEBI's finding that the Noticee was involved in the first leg of the GDR transaction and, in a later order, also upheld his involvement in the second leg.
• The Noticee argued that the penalty was disproportionate compared to similar cases and that he was not connected to the second leg of the transaction.
• The order addresses the specific issue of the fine amount, as the SAT limited the scope of the remand to the quantum of the penalty.

Also in the document

• The GDR issue involved a loss to shareholders of approximately USD 6.05 million, as noted in a prior SEBI order referenced in this document.
• The case has undergone multiple rounds of litigation before the SAT, with the tribunal consistently remanding the matter to SEBI for reconsideration of the penalty amount.
• The Noticee cited other SAT orders where penalties for similar GDR frauds were reduced to significantly lower amounts (e.g., INR 20 Lakhs or INR 25 Lakhs).