“SEBI ORDERS ₹44.87 CR REFUND IN TRAFIKSOL IPO CASE – ₹1.05 CR PENALTY & 1-YEAR MARKET BAN IMPOSED”

 “SEBI ORDERS ₹44.87 CR REFUND IN TRAFIKSOL IPO CASE – ₹1.05 CR PENALTY & 1-YEAR MARKET BAN IMPOSED”

TRAFIKSOL’S ₹44.87 CRORE SME IPO WAS SUBSCRIBED 345.65 TIMES IN SEPTEMBER 2024.

SEBI VS TRAFIKSOL ITS TECHNOLOGIES

KEY RED FLAG?

 ₹17.70 crore of the IPO proceeds—almost 40% of the issue size—was proposed to be used for purchasing software from a vendor.

Concerns over the vendor and the proposed utilisation of funds triggered regulatory scrutiny. The listing was deferred and the IPO was subsequently unwound.

OTHER RED FLAGS FOUND BY SEBI’S INVESTIGATION:

·       Misleading objects of the issue

·       Misstatements in financial statements

·       Concealment of material information

CANCELLATION OF ALLLOTMENT

In December 2024, SEBI directed refund of subscription money to successful investors, with interest, and cancellation of the allotted shares.

MARKET BAN

On August 28, 2026, SEBI barred Trafiksol ITS Technologies Ltd. and promoter-directors Jitendra Narayan Das and Poonam Das from accessing the securities market for one year.

KEY TAKEAWAY

Under SEBI's updated regulations, proceeds from an SME IPO face strict end-use limitations to protect investors from fund diversion and misuse

Almost 40% of the issue size—was proposed to be used for purchasing software from a vendor- This raised as a red flag from a whistle blower.

IPO funds cannot be used to debt repayment of the promotor.

 Spending allocated for general corporate purposes is restricted to a maximum of 15% of the total issue size or ₹10 crore, whichever is lower.

# Your Compliance expert R V SECKAR, FCS, LLB 79047 19295,