Synopsis: SEBI has barred merchant banker First Overseas Capital Limited (FOCL) from operating in the securities market for two years and fined it ?20 lakh for multiple violations of regulatory norms. The move follows repeated non-compliance despite earlier warnings.
In a decisive regulatory move, the Securities and Exchange Board of India (SEBI) has imposed a two-year ban on First Overseas Capital Limited (FOCL), a registered merchant banker, and levied a ?20 lakh penalty for continuous and serious violations of securities market regulations.
The decision came after two consecutive inspections — the first in August 2022 (covering April 2021–March 2022) and the second in February 2024 (covering April 2022–October 2023). Both inspections revealed multiple breaches of SEBI’s merchant banking norms, raising concerns over investor safety and transparency.
According to SEBI’s findings, FOCL engaged in underwriting commitments exceeding 20 times its net worth, took public deposits unlawfully, and participated in non-securities market activities. Moreover, the firm failed to maintain the mandatory minimum net worth of ?5 crore, a key regulatory requirement for merchant bankers.
Adding to its list of violations, FOCL also failed to file half-yearly reports, provided false data, and neglected to renew NISM certifications for key managerial personnel. Despite SEBI’s repeated warnings in 2022 and 2023, the company did not rectify the deficiencies.
The regulator also found incomplete disclosures on FOCL’s website, missing essential details such as issue type, subscription levels, issuer financials, price data, and utilisation of proceeds—a clear violation of SEBI’s public issue disclosure norms.
Further investigation, prompted by directions from the Securities Appellate Tribunal (SAT), confirmed that FOCL had been non-compliant with the net worth criteria since FY 2018–19, indicating persistent regulatory disregard.
As per SEBI’s order, FOCL is prohibited from taking any new issue management assignments for two years and must pay the ?20 lakh fine within 45 days. The company has also been directed to close all open derivative positions within three months.
SEBI emphasized that such sustained non-compliance could pose serious risks to investors and market integrity, reinforcing its stance on maintaining strict oversight over market intermediaries.
Disclaimer: This article is for informational purposes only. It is not intended as financial or legal advice. Readers are advised to refer to SEBI’s official order for complete details and consult a financial expert before making investment decisions.
