In a stunning move that has shaken investor confidence in India’s burgeoning SME IPO landscape, the Securities and Exchange Board of India (SEBI) has barred Synoptics Technologies (STL) and its three key promoters—Jatin Shah, Jagmohan Manilal Shah, and Janvi Jatin Shah—from the securities market. The market watchdog has also imposed a sweeping ban on First Overseas Capital (FOCL), the lead merchant banker to STL’s IPO, prohibiting it from undertaking any new public issue assignments pending further orders.
This enforcement action, described by SEBI’s Whole-Time Member Ashwani Bhatia as addressing a “well laid out plan” to siphon off investor funds, is more than just an indictment of one rogue IPO—it’s a litmus test for the evolving integrity of India’s capital markets, particularly the SME segment, which has until now operated under looser scrutiny.
The Scheme Unraveled
Synoptics Technologies, a Mumbai-based IT services company, came to market with a INR 54.04 crore IPO on 13 July 2023. Of this, INR 35.08 crore was raised via a fresh issue and the remaining INR 18.96 crore came from an offer-for-sale by two promoters. The company had claimed it would use the net proceeds of INR 34.58 crore for legitimate purposes like working capital, strategic acquisitions, and general corporate needs.
However, SEBI’s investigation found a gaping chasm between what was promised and what was done.
Shockingly, on 12 July 2023—a full day before listing and without requisite approvals—INR 19 crore was siphoned out of the IPO escrow account. FOCL, the lead manager, issued instructions for this transfer under the guise of “issue-related expenses,” despite the Red Herring Prospectus (RHP) disclosing just INR 80 lakh as such costs.
The INR 19 crore transfer, therefore, represented over 54% of the fresh issue proceeds and 35% of the entire IPO size—a brazen misrepresentation that SEBI labeled as both “shocking and stunning.”
Fictitious Entities and False Agreements
The plot thickened as SEBI followed the money trail. The INR 19 crore was transferred to three dubious entities—CN IT Solutions, ABS Tech Services, and Dev Solutions—none of which existed at their stated addresses during NSE’s site inspections. Agreements signed with these entities were nearly identical, unsigned by third-party witnesses, and structured as refundable “earnest money deposits” with no documentation of board approvals or due diligence.
In reality, the funds were routed through unrelated shell companies such as Sachiel Exim, Dev Trading, and Transpaacific Shipping, rather than the named recipients. Most damningly, INR 2 crore eventually landed with an individual named Nikhil Rajesh Singh, who used the funds to purchase 1.6 lakh shares of Synoptics on listing day, thereby artificially inflating demand and price.
This orchestrated round-tripping to rig the market is not just a breach of disclosure norms, but an attempt to deceive retail investors and manipulate listing outcomes—an act of securities fraud in its purest form.
FOCL Under Fire: The Common Link in 20 SME IPOs
SEBI’s action does not stop at Synoptics. The regulator revealed that FOCL has managed 20 SME IPOs between May 2022 and April 2025. In a significant move, SEBI has ordered a forensic examination of all these issues, suspecting a recurring pattern of fund diversion masked as issue-related expenses.
Pending IPOs where FOCL is already appointed as lead manager must now appoint independent Monitoring Agencies, even if the issue size is below the INR 100 crore threshold—a regulation previously not mandatory for SME listings. Below is the list of IPOs managed by First Overseas Capital from May 2022:
| IPO Name | IPO Size (INR Cr) |
|---|---|
| Italian Edibles | 26.66 |
| Sameera Agro | 62.64 |
| Electro Force | 80.68 |
| Shree OSFM E-Mobility | 24.60 |
| Graphisads | 53.41 |
| Shanthala FMCG | 16.07 |
| Ondoor Concepts | 31.18 |
| Synoptics Technologies | 54.04 |
| Cell Point | 50.34 |
| Kore Digital | 18.00 |
| Nirman Agri | 20.30 |
| Amanaya Ventures | 2.76 |
| SVJ Enterprises | 6.12 |
| SVS Ventures Limited | 11.24 |
| Ducol Organics | 31.51 |
| Varanium Cloud | 36.6 |
| Ishan International | 18.24 |
| Veerkrupa Jewellers | 8.1 |
| Pyramid Technoplast | 153.05 |
| QMS Medical Allied | 56.87 |
A Tighter Regulatory Net on SME IPOs
This case is the first major enforcement under SEBI’s tightened SME IPO framework, rolled out gradually since mid-2023. These reforms—mandating better disclosures, escrow controls, and monitoring mechanisms—have been lauded by market veterans but criticized by some as overregulation.
But this case proves otherwise: SEBI’s crackdown on Synoptics is a vindication of those very rules. It demonstrates how greater regulatory teeth and site-level scrutiny can prevent small- and mid-sized companies from treating IPO markets as personal piggy banks.
SEBI’s actions reflect a new zero-tolerance stance toward financial misrepresentation. As SEBI has noted, the “continued presence [of FOCL] in the market poses a serious risk to investors and the orderly functioning of the capital markets.”
The Bigger Picture
The Synoptics Technologies scandal is more than a one-off embarrassment—it is a reminder that fraudulent intent can reside even in seemingly small players. In recent years, SME IPOs have become a vehicle for wealth creation, especially for retail and HNI investors seeking alpha in under-researched companies. However, with over 500 SME IPOs launched in the past five years, some have become a breeding ground for opacity and manipulation.
By barring Synoptics Technologies and its promoters, and taking FOCL to task, SEBI has sent a loud message: transparency is not optional, and SME doesn’t mean escape from scrutiny.
What Comes Next?
Synoptics, its promoters, and FOCL now have 21 days to respond to the interim order. SEBI may issue final directions thereafter, potentially leading to financial penalties, disgorgement orders, or prosecution.
For investors, especially those eyeing the SME space, this is a moment of reckoning. Due diligence, once a footnote in small IPOs, must now take center stage.
In the end, this episode should not scare investors away from SMEs—but it should reaffirm the need for smarter regulation, honest merchant banking, and a vigilant retail base.
Key Takeaways:
- INR 19 crore siphoned off before STL even listed on NSE Emerge.
- Funds routed through fictitious entities and shell companies.
- INR 2 crore used to rig Synoptics Technologies’ own stock on listing day.
- FOCL under scrutiny for 20 other SME IPOs; all now being investigated.
- SEBI’s tighter SME IPO rules proved crucial in uncovering the scam.