Accusations of Concealed Disclosures in Rosmerta Digital Services Ltd’s IPO Filing
India:Investors are urging a comprehensive investigation into the SME IPO filing of Rosmerta Digital Services Ltd, citing allegations of fraud and financial misrepresentation. Several complaints have been filed with the Securities & Exchange Board of India (SEBI), the Finance Ministry, and other regulatory bodies, raising concerns about the company’s Draft Red Herring Prospectus (DRHP), which aims to secure over ₹200 crore in funding.
The promoters of Rosmerta Digital Services Ltd, namely Mr. Kartick Vivek Nagpal, Mr. Karan Vivek Nagpal, Rosmerta Technologies Ltd, and Trust Promoter representative Mrs. Aarti Nagpal, stand accused of deliberately withholding critical information in the DRHP. Sources claim that the promoters manipulated financial data and omitted significant details, casting doubt on the credibility of the newly formed company.
It is further alleged that the promoters are acting as proxies for Mr. Vivek Nagpal, the father of the individual promoters and the husband of Mrs. Aarti Nagpal. Mr. Vivek Nagpal has a contentious past, with accusations of involvement in market manipulation, insider trading, and money laundering through a network of related entities. He was previously linked to the 2001 stock market scam involving Ketan Parekh, as reported by the Joint Parliamentary Committee.
A formal complaint by Mumbai-based investor Rohit Vijay Nirmal accuses the promoters of deliberately concealing vital information, citing instances of fraudulent activities, market manipulation, and false representations in the DRHP. “The promoters are operating under the direction of Mr. Vivek Nagpal, who has a documented history of market manipulation, leading to significant losses for retail investors,” Nirmal asserted.
The complaint alleges that despite Mr. Vivek Nagpal’s prior ban from the securities market, the promoters colluded with him, failing to disclose his involvement in Rosmerta Digital Services Ltd. This omission is described as a blatant violation of Indian disclosure laws.
Investors have raised concerns that the financial statements in the DRHP are manipulated and artificially inflated, potentially misleading investors and inflating the IPO’s valuation. Although Mr. Vivek Nagpal does not hold an official title in Rosmerta Digital Services Ltd, he is said to play a significant role in the broader Rosmerta Group, with his involvement being downplayed in the filings due to his legal troubles and past criminal allegations.
“The promoters deliberately hid their relationship with Mr. Vivek Nagpal, a convicted economic offender, to deceive investors and regulatory authorities,” the complaint states. It also highlights the absence of transparent governance practices, raising fears of conflicts of interest and manipulation of corporate decisions for personal gain.
Despite the promoters’ claims of distancing themselves from Mr. Vivek Nagpal, the complaint suggests he still actively promotes entities under the Rosmerta brand, publicly identifying himself as the founder of the group. The complainant also highlighted ongoing legal proceedings in Maharashtra regarding fraudulent bank guarantees provided by Rosmerta, which were not fully disclosed in the DRHP.
Considering the serious nature of these allegations, including non-disclosure, concealment of material facts, and fraudulent activities, the complainant has requested that regulatory authorities immediately halt the IPO process for Rosmerta Digital Services Ltd. The call for action seeks to protect potential retail investors and uphold the integrity of the capital markets through a full-scale investigation.