New Delhi, May 6 -- The Securities and Exchange Board of India (Sebi) has uncovered an elaborate scheme under which Synoptics Technologies Ltd (STL) allegedly diverted IPO proceeds to fictitious entities before listing, and using some funds to artificially inflate the company's share price on its market debut.

The capital market regulator also barred the merchant banker involved from taking up new initial public offering (IPO) assignments.

In a strongly-worded interim order issued on Tuesday, Sebi accused the two entities (the company and the merchant banker) of gross misuse of investor funds, including routing Rs.2 crore to an individual who used the funds to buy shares of Synoptics on the listing day, thus creating artificial demand....