Mumbai, Jan. 12: Sebi today blew the lid off another demat deception, this time digging out 45,000 spurious accounts used to corner shares in IDFC’s initial public offer.
Revelations about the new instance of IPO skullduggery have overshadowed even the Yes Bank scandal, which threw up 6300 multiple accounts in depositories.
The central character this time, too, is Roopalben Panchal, whose shenanigans in the Yes Bank allotment scam exposed just how easily IPO regulations could be subverted.
Registrar to the IDFC offer, Karvy Computer Shares, lead managers Kotak Mahindra Capital and DSP Merrill Lynch, and SBI Capital Markets now face a Sebi probe. Alarmed at the way intermediaries connived with rogue investors, the market regulator has urged the Reserve Bank of India to examine the role of Bharat Overseas Bank, HDFC Bank, Indian Overseas Bank, ING Vysya Bank and Vijaya Bank in opening accounts of these benami entities and, even funding, their share purchases.
The lash could be the hardest on Karvy Computer Shares (Karvy-RTI), suspected to have opened 95 per cent of the 42,056 multiple demat accounts for IDFC shares.
Sebi believes 14,807 of these can be traced to Roopalben Panchal, who, along with Sugandh Estates, Purshottam Budhwani and Manojdev Seksaria, were among the 35 entities banished from bourses today.
The IDFC offer was open for a week from July 15. Once the process was over, Sebi’s surveillance department asked CDSL and NSDL to furnish data on large off-market deals in its shares from July 22 to August 15.
CDSL’s data showed Panchal receiving 39,43,184 shares from 14,807 dematerialised accounts in off-market transactions on August 11. Purshottam Ghanshyam Budhwani got 2,98,412 shares from 1122 dematerialised accounts in a similar way on August 8 ' prior to IDFC’s listing on August 12. According to Sebi, all 14,807 demat accounts of Panchal are tied to Bharat Overseas Bank and Karvy-DP. These were opened with Karvy on July 15-16.
Sugandh Estates received 27,08,944 shares from 10,181 dematerialised accounts on August 8. It transferred most of these to entities which, in turn, offloaded them in off-market deals or on bourses. According to the market regulator, the problem is not with the allotment process, which has, by and large, been “stable and secure”.
“It is in the way in which banks and depository participants connive with the key operators in “derailing the tried and tested process of fair and transparent allotment of shares in initial public offers,” the statement put out by Sebi this evening said.