New Delhi: The Securities Appellate Tribunal on Friday asked the Securities and Exchange Board of India (Sebi) to complete the inquiry first before passing the disgorgement order in IPO scam issued against depository participants.
Eventually, the Tribunal has stayed Sebi’s disgorgement orders against two depositories, National Securities Depository and Central Depository Services, and eight depository participants for their alleged role in the initial public offer (IPO) scam.
However, the tribunal did not question the legality of the disgorgement issue.
The disgorgement order was issued against the entities for alleged violation of know-your-client norms while applying for IPOs during 2003 to 2005.
It is alleged that unscrupulous elements misused the know-your-client norms to apply in the retail category of IPOs to corner shares during allotments.
In its disgorgement order passed at the end of November last year, Sebi had asked the two depositories and 10 entities, including HDFC Bank, ING Vysya Bank, IDBI Bank, Karvy Stock Broking, Khandwala Integrated Financial Services, Kartik Stock Vision and Jhaveri Securities, to pay Rs 115.81 crore by collecting the money from the alleged wrongdoers within six months, reports Business Standard.
National Securities Depository, which was asked to pay Rs 45 crore, pointed out that Sebi had not given the depository any opportunity to defend itself before passing the order.
Even Sebi’s own inquiry proceedings were not yet over, the counsel for the depository said.