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Our Bureau

Issue not a closed chapter as enquiry continues

Mumbai , July 28

SEBI on Friday lifted the ban imposed on IDBI Bank Ltd, ING Vysya Bank and Infrastructure Leasing and Finance Company (IL&FS) from opening new demat accounts. The regulator had imposed the ban on the three entities in its interim order on IPO scam, dated April 27, 2006, for their failure to adhere to the Know Your Clients (KYC) norms.

The three were among the several firms named by SEBI in the IPO investigation report, which saw people opening multiple demat accounts under same address to corner shares earmarked for retail investors during IPOs.

While lifting the prohibition on new account opening, the SEBI Whole-Time Member, Mr T.C. Nair, in separate orders, however, said that the issue was not a closed chapter as a SEBI-appointed Enquiry Officer was looking into the matter. "All issues and contentions (regarding the IPO scam issue) are left open to be considered by the Enquiry Officer appointed by SEBI and to be decided in subsequent proceedings pursuant to his report," the order said.

SEBI also pointed out that the prohibition on opening fresh demat accounts was issued upon a serious suspicion on the genuineness of the accounts subject to verification by the depositories. "It was not a punitive measure, but a preventive step taken by SEBI in view of urgency, pending inquiry in the interest of investors and the securities market," the order said.

Lifting the interim ban, SEBI also noted that RBI had fined the three entities Rs 5 lakh each for violations in the KYC norms.

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