KOCHI: A misleading online advertisement taken out by Muthoottu Mini Financiers Ltd seeking subscription for Rs100 crore non-convertible debentures (NCD) issue has landed the company in trouble resulting in the imposition of Rs10 lakh penalty by the market regulator, Securities and Exchange Board of India (SEBI).
The advertisement that appeared on August 21, 2019 on Manorama Online had reportedly claimed that the Reserve Bank of India (RBI) and SEBI had ‘rated’ the company’s NCD issue, though the advertisement was later removed from the company’s website.
The company said this was its first online advertisement for NCDs and the said advertisement that was placed with Manorama Online was in turn directed to a landing page linked to the company’s website.
Sebi observed that using the names of the regulators tends to impart a sense of security amongst the investors and thus may lead them to believe that the issue has been rated by the regulators and that, by issuing gives a misleading impression to the public at large.
“Therefore, Noticee (Muthoottu Mini) was alleged to have violated the provisions of Securities and Exchange Board of India (Issue and Listing of debt Securities) Regulations, 2008 or ILDS Regulations),” Sebi observed in its note.
Muthoottu Mini management tried to water down the severity of the issue by stating that the advertisement had remained for public view for a short period of time, and that only 242 people had submitted their contact details expressing interest in investing in the NCD.
“As such, the advertisement was on display for less than 48 hours only. Moreover, the 8 investors who invested with us had taken the decision to deposit the amount was based on the faith and trust they instilled upon us,” the company statement to Sebi argued.
Moreover, the mistake of the ‘misleading’ words creeping into the content of the advertisement was entirely owned by the advertisement agency that prepared the ad matter for the company.
Muthoottu Mini’s core businesses are gold loans and Micro Finance and the company has established wide branch presence in the states of Kerala, Karnataka, Andhra Pradesh, Telengana, Tamilnadu, Puducherry, Maharashtra,Goa, Delhi, Uttar Pradesh and Haryana.
