SEBI’s investigation revealed that Midvalley Entertainment Limited had not consumed its IPO proceeds as specified in the draft prospectus. Securities and Exchange Board of India (SEBI) has sent a notice to eight entities, asking them to pay over Rs 98 lakh in a case concerning to mis-utilisation of the Initial Public Offerings (IPO) earnings in the matters of Midvalley Entertainment Ltd (MVEL). As per the report, MVEL stock was listed on the BSE in January 2011.

The notice was received after Midvalley Entertainment, and its directors failed to pay the penalty imposed on them by the Securities and Exchange Board of India (SEBI). SEBI has directed the entities to pay Rs 98.88 lakh, which includes the interest rate and recovery cost, within 15 days.

In the happening of non-payment, it would recover the amount by attaching and selling its movable and immovable properties. Besides, they will also face attachment of their bank accounts and witness the arrest of its directors, SEBI informed in an attachment notice on Friday. Through an order passed on May 31, the regulator levied fines of Rs 2.3 crore on 32 entities, including MVEL and its directors. They are R Chandrasegaran, Sudhir Kumar Jena, Datuk K Ketheeswaran, K Murugavel, Vasan Chidambaram, K Ramdasan and M Pandiyan.

The order was received after SEBI piloted an investigation into the matter of the Initial Public Offering (IPO) of MVEL for January-February 2011. Thus, findings say that MVEL had diverged from the objects of the issue and has not utilised the IPO proceeds stated in the draft prospectus.

Apart from the company, the directors also thoughtlessly omitted to perform their part, resulting in a deviation of IPO proceeds. It did not exercise due diligence to avert the offence, thus violating Prohibition of Fraudulent and Unfair Trade Practices PFUTP norms.