Sebi Slams Gretex Corporate Services with 21-Day Ban Amid Regulatory Lapses

The Securities and Exchange Board of India (Sebi) has taken decisive action against Gretex Corporate Services, preventing the firm from initiating any new merchant banking assignments for a period of 21 days. This comes after Sebi identified significant lapses in Gretex's adherence to regulatory net worth requirements alongside shortcomings in due diligence related to a public issue.

According to Sebi, Gretex failed to maintain the required minimum net worth of Rs 5 crore during the 2019-20 financial year, contravening merchant banking regulations. Moreover, Gretex's lack of adequate due diligence while managing a small and medium-sized enterprises (SME) public issue further exacerbated concerns. Specifically, Sebi highlighted that around 40% of the IPO proceeds were allocated for office space leasing which remained under construction—an omission not disclosed to investors.

In an immediate enforcement action, Sebi restrained Gretex from undertaking new projects or launching schemes, enforcing compliance with its merchant banker registration terms. Separately, the regulator has fined multiple entities for engaging in non-genuine transactions in BSE's illiquid stock options segment, illustrating Sebi's commitment to maintaining market integrity.