SEBI Penalizes Veerkrupa Jewellers for IPO Manipulation Scheme

Case Details

Entity Involved: M/s Veerkrupa Jewellers Limited (VJL) and 16 other noticees including individuals and companies

Order Details: SEBI Order dated May 29, 2026 issued by Quasi-Judicial Authority Santosh Shukla

Investigation Period: June 20, 2022 to May 31, 2024

Financial Impact: Total wrongful gains of ₹6,22,81,526 to be disgorged by Noticees 3, 10, 11, 12, 13, and 14 with 12% simple interest from May 31, 2024. Monetary penalties totaling ₹2.65 crore imposed on various noticees.

Persons Involved

Key Entities and Their Roles:

Noticee 1: M/s Veerkrupa Jewellers Limited - Issuer company
Noticee 2: Mr. Chirag Arvind Shah - Managing Director of VJL
Noticee 3: M/s Vivid Mercantile Limited - Major public shareholder holding 19.84% pre-issue capital
Noticee 4: Mr. Satishkumar Ramanlal Gajjar - MD of Noticee 3
Noticee 5: Mr. Rakshit Mahendra Shah - Chartered Accountant assisting with IPO process
Noticee 6: M/s First Overseas Capital Limited - Merchant Banker and Lead Manager
Noticee 7: Mr. Rushabh Shroff - President Operations of Noticee 6
Noticee 8: Mr. Satish Vadilal Sheth - President of Noticee 6
Noticee 9: M/s Stockk Seva Marketing Private Limited - IPO marketing company
Noticee 10: Mr. Meghkumar Mahendrakumar Shah - Key person associated with Noticee 9
Noticee 11: Mr. Bhavya Dhiman - Director/Promoter of Noticee 9
Noticee 12: Mr. Dipak Mathurbhai Salvi - Mule account of Noticee 10
Noticee 13: M/s Bhavesh A Vora HUF - Acquaintance of Noticee 10
Noticee 14: Mr. Dharmesh Maldevbhai Godhania - Acquaintance of Noticee 10
Noticee 15: Mr. Akshay Rajendrabhai Oswal - Connected to Noticee 10 through fund transfers
Noticee 16: M/s NNM Securities Private Limited - Market maker appointed from March 23, 2023
Noticee 17: M/s Miker Financial Consultants Private Limited - Group entity of Noticee 16

Violations and Allegations

Summary of Violations:

Noticees 1 to 11 were part of a fraudulent scheme to publish misleading information about VJL's SME IPO that was likely to influence investor decisions
The scheme involved publishing a paid Zee News article on June 23, 2022 and YouTube videos promoting a false Grey Market Premium (GMP) of ₹7
Noticee 6 (Merchant Banker) violated ICDR Regulations and Merchant Bankers Regulations by failing to ensure proper disclosures and due diligence
Noticees 10, 11, 12, 13, and 15 created misleading appearance of trading and contributed significantly to volume and price rise during Patch-1 (July 18-August 29, 2022) and Patch-2 (December 14, 2022-February 14, 2023)
Noticee 14 purchased shares immediately upon listing and sold during Patch-2, making wrongful gains
Noticees 15, 16, and 17 created misleading appearance of trading during Patch-3 and Patch-4 (price fall periods)
Noticee 10 violated Regulation 8(1)(a) of PFUTP Regulations by failing to respond to summons
Noticee 11 violated Regulation 8(1)(b) of PFUTP Regulations by failing to appear before Investigating Authority

Regulations Cited:

Sections 12A(a), (b), (c) of SEBI Act, 1992
Regulations 3(a), (b), (c), (d), 4(1), 4(2)(a), (e), (f), (k), (r) of PFUTP Regulations, 2003
Regulation 263 read with Schedule IX of ICDR Regulations, 2018
Regulation 13 read with Schedule III of Merchant Bankers Regulations, 1992
Sections 11C(3), (5), (7) of SEBI Act

Penalties, Settlement Terms & Rulings

Monetary Penalties Imposed:

Noticee 2: ₹20 lakh under Section 15HA
Noticee 4: ₹10 lakh under Section 15HA
Noticee 5: ₹10 lakh under Section 15HA
Noticee 6: ₹20 lakh under Section 15HA + ₹10 lakh under Section 15HB
Noticee 7: ₹20 lakh under Section 15HA
Noticee 8: ₹20 lakh under Section 15HA
Noticee 9: ₹20 lakh under Section 15HA
Noticee 10: ₹50 lakh under Section 15HA + ₹30 lakh under Section 15HA + ₹20 lakh under Section 15A(a)
Noticee 11: ₹10 lakh under Section 15HA + ₹10 lakh under Section 15HA + ₹10 lakh under Section 15A(a)
Noticee 12: ₹10 lakh under Section 15HA
Noticee 13: ₹10 lakh under Section 15HA
Noticee 14: ₹10 lakh under Section 15HA
Noticee 15: ₹10 lakh under Section 15HA
Noticee 16: ₹20 lakh under Section 15HA
Noticee 17: ₹10 lakh under Section 15HA

Wrongful Gains Calculation:

Noticee 10: ₹2,92,96,300
Noticee 11: ₹2,09,88,900
Noticee 12: ₹12,46,771 (attributed to Noticee 10)
Noticee 13: ₹6,94,199
Noticee 14: ₹59,70,800
Noticee 3: ₹40,84,556
Total: ₹6,22,81,526

Actions, Compliance and Future Obligations

Corrective Actions Required:

All noticees are restrained from accessing securities market and prohibited from buying/selling/dealing in securities for periods of 3-5 years
Noticees must close any open derivative positions within 3 months from order date
Noticees 3, 10, 11, 12, 13, and 14 must disgorge wrongful gains with 12% interest to Investor Protection and Education Fund within 45 days
Noticees are prohibited from selling assets except for penalty payment purposes
Banks are directed to allow debit only for disgorgement/penalty payments

Market Restraint Periods:

5 years: Noticees 1, 2, 3, 4, 7, 8, 9, 10, 11
3 years: Noticees 12, 13, 14, 15, 16, 17

Final Ruling and Enforcement

Final Decision:

SEBI found all charges substantiated against the noticees
The order comes into effect immediately
Restraint periods for Noticees 6, 16, and 17 will run consecutively after existing restraint periods from previous SEBI orders

Enforcement Actions:

Recovery proceedings under Section 28A of SEBI Act may be initiated for non-payment within 45 days
Order to be served on all noticees, SEBI, stock exchanges, banks, depositories, and RTA for compliance
Payments to be made through SEBI's online payment portal

Key Findings:

The scrip price rose 250% within 29 trading days post-listing due to manipulative activities
Noticees 10, 11, and 12 were key persons behind the misleading publicity and manipulative trading
Form SH-4 used to support share transfer between Noticee 2 and 3 was invalid and factually inconsistent
Bonus shares issued to Noticee 3 were invalid as they were not properly registered as member
The merchant banker failed in due diligence obligations and was part of the fraudulent scheme