Financial Daily from THE HINDU group of publications
Friday, Dec 16, 2005
Financial Daily from THE HINDU group of publications Friday, Dec 16, 2005 |
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Regulatory Bodies & Rulings Money & Banking - Private Banks Markets - IPOs Industry & Economy - Economic Offences Modus operandi in YES Bank deal Our Bureau
Mumbai , Dec. 15 THE modus operandi adopted in manipulating the YES Bank Ltd (YBL)'s initial public offering (IPO) allotment involved opening of over 7,500 benami dematerialised accounts. These accounts were with the National Securities Depository Ltd (NSDL) through Karvy Stockbroking Ltd (Karvy-DP). Of the 13 erring entities, the chief culprits identified by SEBI were Ms Roopalben Panchal and Sugandh Estates and Investments Pvt Ltd. While Ms Panchal opened 6,315 benami DP accounts, another entity Sugandh opened 1,315 benami accounts. Each of these accounts applications were made for 1,050 shares, paying application money of Rs 47,250 each. By applying for small lots (1,050 shares through each accounts), they misused the retail allotment quota stipulated for IPOs. The shares allotted in IPO to the benamis of Ms Panchal and Sugandh would have otherwise gone to genuine retail applicants. The IPO of YBL opened on June 15, 2005 and its shares were listed on the BSE and the NSE on July 12, 2005. It was observed that Ms Panchal had transferred 9,31,600 shares to various entities in seven off-market transactions on July 11 - a day prior to the listing and commencement of trading on the stock exchanges. In order to get an allotment of 9,31,600 shares, Ms Panchal would have had to apply for crores of shares involving many crores of rupees in application money. However, Ms Panchal's name did not appear in the list of top 100 public issue allottees. Thus, it was suspected that Ms Panchal must have made multiple applications or that other applicants were acting as a front for her. Ms Panchal had applied for only 1,050 shares in the YES Bank IPO, paying the application money of Rs 47,250. And she did not receive any allotment in the IPO. On July 6, Ms Panchal received 150 shares each from 6,315 allottees through off-market transactions aggregating 9,47,250 YBL shares. Curiously, as per the dematerialised account data furnished by NSDL, of the above 6,315 entities as many as 6,221 entities have a same address in Ahmedabad. There are three more addresses of locations in Ahmedabad, which have been linked to Ms Panchal. All the 6,315 entities have their bank accounts with Bharat Overseas Bank and demat accounts with Karvy-DP. By applying for the maximum possible number of shares per applicant while being categorised as retail applicant and by putting in large number of applications in the lot of 1,050 shares, Ms Panchal and her associates (real or fictitious) have attempted to corner the maximum possible number of shares in the IPO allotment. This tantamounts to an abuse of IPO allotment process, the SEBI order said. A similar modus operandi was adopted by Sugandh, which received 150 shares each from 1,315 dematerialised accounts aggregating 1,97,250 shares in off market transactions. According to SEBI findings, Ms Panchal and others booked profits to the tune of about Rs 1.70 crore on the day of the listing of YES Bank shares.
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