A string of accounting frauds unearthed by Sebi this month poses one other danger to the blistering rally in shares of small companies. Varanium Cloud and Add-Store E-Retail – each listed on the small and medium enterprises (SME) platform – have been discovered to have manipulated their monetary statements to gas beneficial properties of their shares, in keeping with preliminary orders issued by Sebi.The authorities have banned each corporations and their founders from dealing within the capital market.
The crackdown comes after the regulator issued warnings earlier this yr of value manipulation in tiny IPOs. Analysts say the event presages higher regulatory motion, which can mood additional beneficial properties within the BSE SME IPO Index of micro listings that has soared greater than 5,000% because the begin of 2021.
“That is simply the tip of the iceberg,” mentioned Ambareesh Baliga, a market skilled. “Fewer rules have been meant to draw good high quality SMEs to the market… as a substitute it has attracted the improper ones.”
Know-how agency Varanium Cloud was discovered to have misused funds raised from its public providing in 2022, and “manipulated its monetary statements by recording fictitious gross sales and purchases”, Sebi mentioned in its order dated Might 10.
The crackdown comes after the regulator issued warnings earlier this yr of value manipulation in tiny IPOs. Analysts say the event presages higher regulatory motion, which can mood additional beneficial properties within the BSE SME IPO Index of micro listings that has soared greater than 5,000% because the begin of 2021.
“That is simply the tip of the iceberg,” mentioned Ambareesh Baliga, a market skilled. “Fewer rules have been meant to draw good high quality SMEs to the market… as a substitute it has attracted the improper ones.”
Know-how agency Varanium Cloud was discovered to have misused funds raised from its public providing in 2022, and “manipulated its monetary statements by recording fictitious gross sales and purchases”, Sebi mentioned in its order dated Might 10.
