## Punishment for Personation in Acquiring Securities — Section 38
### What is 'personation'?
Personation here means illegally pretending to be another person — typically to grab a larger allotment than one is entitled to in an oversubscribed public issue, by making multiple applications under different identities.
### Acts that trigger Section 38
A person becomes liable under Section 447 (fraud) if he does ANY of the following:
1. Makes or abets an application in a fictitious name to acquire/subscribe to securities;
2. Makes or abets multiple applications in different names or different combinations of his own name; or
3. Induces a company directly or indirectly to allot or register transfer of securities to him or another person in a fictitious name.
('Abets' = assists or encourages.)
### Why this matters
In an oversubscribed IPO, applications are scaled down. A fraudster who applies 50 times under fictitious names corners a disproportionate share of the issue and defeats the pro-rata allotment process — directly harming genuine investors.
### Consequences on conviction
- Liability under Section 447 — the general anti-fraud provision (which carries serious imprisonment and fines).
- The court may additionally order:
- Disgorgement of gain — the offender must return any money illegally made. This sum is credited to the Investor Education and Protection Fund (IEPF).
- Seizure and disposal of securities found in his possession.
### Disclosure obligation on the company
The company must state the substance of Section 38 in both:
- The prospectus, and
- The application form for securities.
This serves as a fair warning to applicants.