IL&FS: Ravi Parthasarathy and 4 Top Executives Pay To Settle Manipulation Charge in Adani Export Stock
In February 2017, when the Infrastructure Leasing & Financial Services  (IL&FS) was already facing a liquidity crisis and its board of directors was probably discussing a fat, 144%  pay hike for chairman Ravi Parthasarathy (taking his pay to Rs26.3 crore), he was busy settling a stock manipulation charge by the Securities & Exchange Board of India (SEBI), along with four other senior employees. And what is worse, IL&FS apparently paid for this too, although it was a paltry amount in relation to his salary. 
In January 2014, SEBI issued a show-cause notice to five top executives of IL&FS charging them with stock manipulation and synchronised trading in Adani Exports Ltd. The charge was against Mr Parthasarathy (erstwhile chairman), Hemang Raja (managing director) and Vimal Bhandari, Arun Kumar Saha and Vibhav Kapoor, all directors of erstwhile Investmart India Ltd (IIL). 
While SEBI’s action remained hidden from the public, it was surely something that was serious enough to be discussed by the board, which saw it fit to reward Mr Parthasarathy even while the company faced a liquidity crisis. 
Typical of the shady manner in which the Indian regulator settles serious charges — on payment of money and without admission of guilt—the settlement order has minimal and sketchy details of the exact charge against the officials and SEBI’s findings.  
All it says is that SEBI's investigation in Adani Exports scrip during January 1999 and February 2001, revealed synchronised or structured and cross trades executed by IIL for its clients, "which resulted in manipulation of price and volume of the scrip of Adani Exports.” 
It further says, "IIL also alleged to have paid Rs57 crore for the sale transactions to its clients without receiving the pay-out from the exchange. The SEBI order is available here
The market regulator then issued show-cause notices to Mr Parthasarathy and the four executives who were in charge of affairs of IIL when the stock manipulation took place. 
All the five filed separate applications seeking to settle, without admitting or denying the findings of fact and conclusions of law, the pending enquiry proceedings initiated against them.
SEBI's high powered committee (HPC), on 14 December 2016, recommended settlement upon payment of Rs34.42 lakh each from Mr Parthasarathy and Mr Raja and Rs13.77 lakh each from Mr Bhandari, Mr Kapoor and Mr Saha. 
After receiving the fine, SEBI, in its settlement order issued on 13 February 2017, said, "...the proceedings initiated against the Applicants for the alleged violation are settled qua the Applicants as per the above terms, by way of this order and SEBI shall not proceed with any enforcement action against the applicant for the said defaults."
IIL later became ‘IL&FS Investmart Securities Ltd’ and, at present, is known as ‘HSBC InvestDirect Securities (India) Ltd, a SEBI-registered broker.
Liju Oommen
6 years ago
ILFS is india's lehmann. It should have been left to die and send the management which perpetrated the fraud to jail. But in india we have the habit of throwing good money after bad.
Replied to Liju Oommen comment 6 years ago
If we let IL&FS fail, the colateral damage will be too much. Already the bill is very high. Look at the Index

The collateral damage would be enormous. Already the damage is huge. Look at NIFTY before IL & FS downgrade (on 17th Sep 2018 ) and today. That is exactly what happened with Lehmann. Had US authorities intervened at that time ,the damage to the world economy would have been much less. An ounce of prevention is worth ton of cure. Certainly in the market. This not say that the rotten apples should be rescued every time. Exactly the opposite. such decay should be detected and eliminated at the first stage itself. Almost everybody in the system failed over a long time while the criminal gang continued their looting.

jaideep shirali
6 years ago
As more skeletons tumble out, the question that still remains is what were Directors like R C Bhargava and Jerry (Jaitirth Rao) doing on the Board of Directors ? Should'nt such Directors be penalised in some way for being mute and almost willing accomplices in this fraud ? Why are'nt the ILFS top management being charged and arrested, unless the rot goes all the way to the top levels in our country ? It seems the new Board, comprised of mainly bureaucrats will only serve the job of brushing the dirt under the carpet.
ramchandran vishwanathan
6 years ago
Spineless Regulators & equally spineless Senior Management
Ramesh Poapt
6 years ago
It appears more cases like ILFS will come out in due course...beware!
6 years ago
With substantial stakes of LIC and SBI and with top paid Auditors how did this come to pass ? Looks like Satyam Redux only much much grave...

Sunil Rebello
Replied to KALPATHY KRISHNAMURTHY comment 6 years ago
LIC investments value crashes below their cost.

Also GOI will get only paltry LTCG as most companies below their cut of rate
suneel kumar gupta
6 years ago
Another thing not pointed out is delay in deciding financial cases. 17 years for this is also questionable.
6 years ago
Authorities should immediately catch hold of all these criminals - including those in charge in SEBI- and throw them in a cell in any Indian jail. Certainly a PIL can be filed in a court of law. Anyway their properties should be confiscated immediately. They are nothing but loots from PSU banks, companies ,investors etc. Now the nation is paying for their sin.
Free Helpline
Legal Credit