Sebi's prisoner number one

Kolar Biotech Chairman Vinod Hingorani had told his mother he would return to his rented apartment on Mira Road here by 2 pm on Thursday. But by evening, he found himself in Byculla Jail, the first person to be sent to jail by the Securities and Exchange Board of India (Sebi).

The market regulator said Hingorani had defaulted on penalties of Rs 1.65 crore.

Hingorani, born and brought up in Andheri here, studied commerce in RD National College, Bandra. He shifted to Mira Road 20 years ago. His mother says the rent for their apartment is Rs 12,000 a month.

Hingorani told Sebi he had sold the flat two years ago and was now staying there on a lease-back agreement.

After trouble started brewing up at Kolar, he separated from his wife. His daughter stays with his wife.

Hingorani is accused of being involved in the release of false advertisements of a bonus issue at the company, according to a 2010 Sebi order. The subsequent rise in the share price was used to unload stake by entities linked to Raj Kumar C Basantani, the company’s promoter.

Sebi imposed penalties on those involved in the market manipulation, including Hingorani. However, Hingorani said he was non-executive chairman and had no role in the matter; he didn’t pay any money towards the penalty.

“Bade bade logon ka naam hain par isiko arrest kiya hain (big names are involved but he alone has been arrested),” his mother says, in tears.

Through the past eight years, he is said to have spent most of his time at home. Recently, he, along with a few friends, took a shop on rent, though the business hasn’t fared well.

At the end of the last quarter, there were 1,627 entities declared defaulters by Sebi, according to data on the regulator’s website. At least half a dozen had been directed to pay penalties higher than that announced for Hingorani.

Following Thursday’s Sebi directive, Hingorani was sent to a civil prison, meant for those jailed for non-criminal offences. Though such prisoners are typically segregated from criminals, a PIL filed in 2007 alleged in Byculla Jail, about 9,000 prisoners occupied the space meant for 200.

Before being taken to jail, Hingorani was taken to King Edward Memorial hospital in Parel. His mother says he is diabetic and has blood pressure and hernia ailments.

Kolar Biotech was incorporated as Kolar Securities Services on January 13, 1994. Subsequently, it became an information technology company, renaming itself Kolar Information Technologies. After the dotcom bust, it became Kolar Biotech.

The registered corporate address of Kolar Biotech has a coaching institute on the ground floor, a real estate firm on the first and a lodge on the second. No one here has heard of Kolar. Calls to the telephone number listed on an exchange website were responded to by a recorded message that said the number didn’t exist.

The company hasn’t filed its financials since June 2003.

According to a regulatory source, Hingorani had alleged Basantani had appointed peons and drivers as directors in fraudulent companies, adding many of them were now facing criminal charges from various authorities, including the stock market regulator. Hingorani is facing more than 750 cases, filed by various investors in securities and fraudulent fund collective activities by the companies he was associated with.