Ruchi Soya FPO Bid: Sebi Asks Company For Withdraw Offers After SMS Controversy

Sebi directs Ruchi Soya to offer a bid withdrawal option to FPO investors after finding unsolicited SMS in circulation; Ruchi Soya issues clarification, says it has filed FIR with police
Ruchi Soya FPO Bid: Sebi Asks Company For Withdraw Offers After SMS Controversy

The Securities and Exchange Board of India (Sebi) had directed Ruchi Soya Industries to offer an option to investors to withdraw their bids in the company’s Rs 4,300 crore follow-on public offering (FPO) from March 28 to March 30, 2022.

Sebi took the decision after it came to its notice that unsolicited SMSs were being circulated about this FPO offer by bad actors. While there was nothing bad or wrongdoing about the FPO offer, it was the manner of "making investors aware of it" that led to it taking this action.

"Great news for all the beloved members of Patanjali parivar. A good investment opportunity in the Patanjali Group. The Patanjali Group company, Ruchi Soya Industries Ltd, has opened the Follow-On Public Offer (FPO) for retail investors. The issue closes on March 28, 2022. This is available in the price band of 615–650 rupees per share, i.e., a discount of about 30% to the market price, "the unsolicited message read, as per various media sources.

What Are Unsolicited Messages?

Unsolicited messages are those texts that contain misleading claims, and most of them include words like "good investment opportunity," "multi-bagger tips," and "super profit," among others.

Bad actors circulate these texts to dupe investors of their hard-earned money since most of these claims are not backed by solid research or any fundamental understanding. A registered investment advisor will never publicly give out investment tips since each individual’s needs are different, and hence, their financial goals are also different.

In the particular example of Ruchi Soya, phrases such as "good investment opportunity" and "discount of about 30 percent off market price" were written, which constitutes misleading and bogus claims being spread by unknown bad actors.

Sebi has clearly laid out guidelines regarding investor communications regarding stock investment news and other corporate news.

It has come to the notice of Sebi that many entities have been luring investors through unsolicited calls and SMS with assurances of guaranteed profits on the trading tips they provide. Therefore, under the provisions of the Sebi Act, 1992, read with the Sebi (Investment Advisers) Regulations, 2013 and Sebi (Research Analysts) Regulations, 2014, no person shall act as an investment adviser or a research analyst without obtaining a certificate of registration from Sebi," reads an excerpt from the Sebi circular regarding unsolicited SMS.

The Patanjali Group company, Ruchi Soya Industries Ltd, has opened the Follow-On Public Offer

Ruchi Soya Provides Clarification and Files an FIR

The management of Ruchi Soya Limited has issued a clarification saying they have not issued any such statement and have, in fact, filed a First Information Report (FIR) with a police station in Haridwar in view of the matter.

Ruchi Soya said in a public notice: "We understand that there are SMS/messages in circulation on social media, speculating about investment in our company’s issue and about equity shares of our company being available at a discount to market price ("Message"). We wish to bring to the attention of the investors that this message has not been issued by the company or any of our Directors, Promoters, Promoter Groups or Group Companies. A first information report bearing No. 0188 dated March 27, 2022 ("FIR") has been logged by our company with a police station at Haridwar to take up an investigation in respect to the circulation of the message, under Section 67A of the Information Technology Act, 2000 and Section 420 of the Indian Penal Code, 1860.

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