Markets regulator Sebi has ordered a forensic audit of Pacific Finstock Ltd (PFL) after finding prima facie evidence of misrepresentation of financials by it.
PFL is among the firms against which Sebi initiated action on August 7 by ordering trading restrictions, following receipt of a list of 331 suspected shell companies from the government.
In an order dated October 26, the regulator has ordered the appointment of an independent forensic auditor to verify any misuse of the books of accounts or funds as well as any misrepresentation including of financials and business of the firm.
“I observe that PFL has failed to submit adequate documents to substantiate the figures disclosed in its financials and to establish their genuineness,” Sebi Whole Time Member Madhabi Puri Buch said.
“…there is prima facie evidence of misrepresentation of financials by the company and a strong suspicion regarding the misuse of books of accounts/funds by the company,” she added.
Besides, Sebi has allowed PFL promoters and directors to buy the securities of the companies. However, they can not sell the company’s securities held by them.
While the curbs were imposed on the 331 firms from August 8 onwards, they were eased with regard to some companies following appeals against the ruling. In some instances, the Securities Appellate Tribunal asked the regulator to continue with its probe and pass orders expeditiously.
The regulator found that the companies identified as shell companies were potentially involved in misrepresentation including of their financials and businesses in violation of listing regulations.