Zenith Infotech Concludes 12-Year Sebi Case with Rs 3.56 Crore Settlement
Zenith Infotech and its promoters have settled a 12-year regulatory case with the Securities and Exchange Board of India (Sebi) for Rs 3.56 crore. The settlement, approved by a Mumbai Sessions Court, was reached through Sebi's consent mechanism. The case, which began with allegations of improper disclosures, fund diversion, and asset stripping related to foreign currency convertible bonds defaults, concluded with no evidence of siphoning, asset stripping, or insider trading. All restrictions on Zenith Infotech and its directors have been lifted following the settlement.
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Zenith Infotech and its promoters have brought closure to a protracted legal dispute with the Securities and Exchange Board of India (Sebi), marking the end of a 12-year regulatory case. The settlement, approved by a Mumbai Sessions Court, was reached through Sebi's consent mechanism, with the company and its promoters paying Rs 3.56 crore.
Key Settlement Details
| Aspect | Details |
|---|---|
| Settlement Amount | Rs 3.56 crore |
| Payment Date | September 9 |
| Settling Parties | Zenith Infotech, Rajkumar Saraf, Akash Saraf |
| Regulatory Body | Securities and Exchange Board of India (Sebi) |
| Case Duration | 12 years |
| Settlement Mechanism | Sebi's consent mechanism |
| Approving Authority | Mumbai Sessions Court |
Case Background
The regulatory action against Zenith Infotech originated from Sebi's interim order in March 2013. The order alleged:
- Improper disclosures
- Fund diversion
- Asset stripping related to foreign currency convertible bonds defaults
As a result, the company was barred from participating in capital markets.
Investigation Findings
Sebi conducted an extensive multi-year investigation, which included collaboration with overseas banking authorities. The investigation yielded the following results:
- No evidence of siphoning
- No evidence of asset stripping
- No evidence of insider trading
These findings were confirmed in a 2018 Sebi order, which declined to impose disgorgement on the company.
Outcome
Following the settlement:
- All restrictions on Zenith Infotech have been lifted
- Restrictions on the company's directors have also been removed
This settlement brings to a close a long-standing regulatory case, allowing Zenith Infotech and its promoters to move forward without the cloud of legal uncertainty that has hung over them for more than a decade.
The case underscores the importance of regulatory compliance and the potential long-term implications of alleged financial improprieties. It also highlights the effectiveness of Sebi's consent mechanism in resolving protracted disputes, providing a path for companies to address regulatory concerns and return to normal operations.
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