On Tuesday, SEBI, the market regulator, directed Trafiksol ITS Technologies to cancel its Rs 45 crore Initial Public Offering (IPO) and refund all investor money, including interest.
This decision was made after discovering misleading information in the company’s prospectus and its suspected ties to a shell entity.
Fraudulent Practices and Vendor Issues
Trafiksol ITS, a Noida-based company specializing in intelligent transportation systems, came under scrutiny despite its IPO being oversubscribed.
Earlier in October, the Bombay Stock Exchange (BSE) had delayed listing the company on its SME platform due to investor concerns.
SEBI’s investigation found that Trafiksol had submitted fraudulent documents from a questionable third-party vendor (TPV) to validate software purchases worth Rs 17.7 crore.
The investigation revealed that TPV was a shell company with fake financial records and no expertise in software development.
Although Trafiksol claimed to have followed its procurement policies, it could not justify selecting this vendor.
Refund Process and Oversight
SEBI has instructed the BSE to manage the refund process and ensure completion within a week.
Additionally, Trafiksol must cancel any shares already allocated to investors’ demat accounts.
Background of the Company and IPO
Trafiksol ITS provides automation solutions for traffic and toll management projects.
Despite concerns delaying its listing, the Rs 45 crore IPO saw massive interest, with subscriptions exceeding 345 times and bids totaling over Rs 10,000 crore.
Issues with Fraudulent Documents and Shell Entity
Trafiksol ITS, a Noida-based company that provides intelligent transportation systems, ran into trouble after its IPO received overwhelming interest.
In October, the Bombay Stock Exchange (BSE) postponed its listing on the SME platform because of concerns from investors.
SEBI’s investigation revealed that Trafiksol had used fraudulent documents from a questionable third-party vendor (TPV) to justify spending Rs 17.7 crore on software purchases.
The TPV turned out to be a shell company with no real financial records or experience in software development.
Despite Trafiksol’s claim of following proper procurement procedures, it couldn’t explain why it chose this specific vendor.
