sebi:WTM/GA/37/ISD/12/05

SEBI · SEBI · 2005-06-15 · G. Anantharaman, Whole Time Member

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Facts / Headnote

Interim directions issued restraining/monitoring the noticees' conduct pending investigation; NSDL directed to ensure the 6315 and 1315 demat accounts are not used for future IPO allotment manipulation; NSDL directed to conduct comprehensive inspection of Karvy-DP; NSDL and CDSL advised to enhance surveillance; reference to be made to RBI regarding BhOB and Vijaya Bank; BSE, NSE, NSDL and CDSL directed to enforce the directions; noticees given 15 days to file objections and seek personal hearing.

Provisions invoked

• s. 11B
• s. 19

Holding

SEBI's Whole Time Member found a prima facie case that Roopalben Panchal, Sugandh Estates and their associates abused the YBL IPO allotment process by using thousands of benami/fictitious applicants to corner retail-category shares, and issued interim directions under Sections 11B and 11(4)(b) pending formal investigation.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER SECTIONS 11B AND 11(4) OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF YES BANK LTD. WTM/GA/37/ISD/12/05 1.0              Background 1.1.            The issue of alleged manipulations in Initial Public Offerings (IPOs) of various companies has been engaging the attention of SEBI for some time. SEBI has also been r information regarding alleged abuse of IPO allotment process. 1.2.            In view of the above, the surveillance department of SEBI advised the stock exchanges to examine trading during the period immediately prior to listing and immediate commencement of trading in the stock exchanges in respect of certain companies that had come out with IPO in the recent past. 1.3.             Yes Bank Ltd. (“YBL”) was one such company that had come out with an IPO in the recent past. 1.4.            As sought by SEBI, during October 2005, Bombay Stock Exchange (“BSE”) submitted an analysis of off market transactions in the shares of Yes Bank Ltd. (“YBL”) during listing period. 1.5.            The Initial Public Offer (IPO) of YBL opened on June 15, 2005 and its shares were listed on the Stock Exchanges, namely BSE and National Stock Exchange (“NSE”) on

3.6.            Since Ms. Roopalben Panchal had applied for only 1050 shares, she was entitled for an allotment of a maximum of 150 shares as per the basis of allotment which was f on July 4, 2005. As mentioned earlier, Ms. Roopalben Panchal had made off market transfers of 9,31,600 shares to various entities on July 11, 2005 i.e. prior to the list commencement of trading on the stock exchanges on July 12, 2005. This raised a doubt as to how she had acquired the above 9,31,600 shares in the first place. 3.7.     Upon perusal of the transaction statement of the dematerialized account of Roopalben Panchal (Client Id: 11920868) held with the DP Karvy Stockbroking Ltd. (“Karvy - D Id: IN300394), as obtained from National Securities Depository Limited (“NSDL”), it was observed that Ms. Roopalben Panchal had received 150 shares each from dematerialized accounts aggregating to 9,47,250 shares in off market transactions. It was noticed that all the above dematerialized account transfers to Roopalben Panc taken place from various dematerialized accounts held with the Karvy-DP. 3.8.            Out of the above 6,315 dematerialized accounts, 20 accounts were randomly selected and Karvy-RTI was advised to furnish the copies of application forms received f entities holding the above 20 randomly selected dematerialized accounts. Upon perusal of the copies of the application forms furnished by the Karvy-RTI, it is seen tha applicants had furnished their addresses as Bharat Overseas Bank Ltd

2.0. IPO of YBL 2.1. YBL came out with a public issue of 70,000,000 equity shares of Rs. 10 each for cash at a price of Rs. 45 per equity share (including share premium of Rs. 35 per equity share) aggregating to Rs. 3,150 million constituting 25.93% of the fully diluted post issue paid up capital of YBL. 2.2. Out of 70,000,000 equity shares offered in the public issue 35,000,000 equity shares were reserved for QIBs, 17,500,000 equity shares were to be allotted Non Institutional Investors and 17,500,000 equity shares were reserved for Retail Investors. The pre-issue capital of YBL consisted of 200,000,000 equity shares and the post issue capital of YBL was to be 270,000,000 equity shares. 2.3. The IPO opened on June 15, 2005 and closed on June 21,

Source: SecMarx — sebi:WTM/GA/37/ISD/12/05. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.