Sebi slaps Rs 6 lakh fine on Ebix for disclosure lapses in DRHP
24 Dec 2024, 11:13 PMSebi found that crucial information, such as regulatory actions and financial plans, was omitted in the draft red herring prospectus.
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Sebi has fined EbixCash Ltd and its promoter, Ebix Inc, Rs 6 lakh for not adhering to disclosure norms related to their proposed IPO.
The penalty stems from an investigation into their non-compliance with the Issue of Capital and Disclosure Requirements (ICDR) guidelines.
Sebi found that crucial information, such as regulatory actions and financial plans, was omitted or inadequately disclosed in the draft red herring prospectus.
In the order dated December 19, Sebi's adjudicating officer Asha Shetty noted that the press release (dated July 6, 2023) issued by the promoter Ebix, with respect to the Hindenburg report, had "downplayed the material impact of revenue restatements and misrepresented ongoing court proceedings".
The short-seller Hidenburg had released a report titled 'Ebix: This House of 'Cards' Seems to Have a Glaring Fake Revenue Problem'. Ebix had claimed that the press release issued in response to this report addressed the report's claims through public clarifications and legal actions.
On examining whether the press release provided incorrect disclosures about the Hindenburg Report, Sebi found that the press release claimed that the restatement of revenues was numerically immaterial, but the revenue figures restated saw a change of over 64%.
"The change of over 64% in revenue figures undermines the assertion of numerical immateriality and raises significant questions about the transparency of the disclosures made by the Noticee," Sebi said. "The disclosures (made through the press release) failed to explicitly acknowledge the scale and materiality of the financial restatement," the regulator added.
The markets regulator also emphasized the need for consistent public disclosures to protect investor interests.
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