The Telegraph
Since 1st March, 1999
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Yes Bank unlucky for 13

Mumbai, Dec. 15: In a move to protect retail investors’ interests, the Securities and Exchange Board of India today debarred 13 entities from trading in Yes Bank shares and forthcoming IPOs for their alleged involvement in manipulation of shares of the new generation bank.

Of the 13 entities, Roopalben Nareshbhai Panchal and Sugandh Estates and Investments Pvt Ltd have been found by the market regulator to manipulate the IPO allocation in collusion with others. Roopalben Panchal is alleged to have opened 6300 demat accounts to corner the maximum number of shares from the IPO.

The other entities are Devangi Dipakbhai Panchal, Seer Finance, Excell Multitech Ltd, Zenet Software Ltd, Tauras Infosys Ltd, Rajan Vasudev Dapki, Barghav Panchal (HUF), Jayantilal Jitmal, which work as conduit for either Roopalben Nareshbhai Panchal or Sugandh for manipulation in share allocation of the Yes Bank IPO.

“These entities are directed not to buy, sell or deal in the shares of Yes Bank Ltd and other ensuing IPOs directly or indirectly, till further directions,” Sebi said in its order.

The market regulator also said there was a likelihood that benami and front entities, which worked as conduit for Panchal and Sugandh Estates and Investments, may end up acting as conduits for laundering of ill-gotten funds from proceeds of crime, drug trafficking, terrorist financing and a host of other related activities.

To investigate further, the market regulator has asked the Reserve Bank of India (RBI) to examine the role of Bharat Overseas Bank and Vijaya Bank in opening the accounts of these benami entities and funding their IPO applications.

Sebi has also come down hard on Karvy DP that opened the dematerialised accounts of the benami entities.

Sebi pointed out that Karvy did not take adequate steps to ascertain the genuineness of these entities.

It has directed the National Securities Depository Ltd (NSDL) to inspect Karvy-DP, particularly focusing on the systems and procedures to implement the ‘know your client’ norms that depository participants (DPs) are required to follow. NSDL was also not spared by Sebi.

Sebi feels further probe is required to examine the systemic fault of the registrar, Karvy RTI (Karvy Computershares), and the lead managers, DSP Merrill Lynch and Enam Financial Consultants, in identifying and weeding out the benami applications.

Detailing irregularities in allocation of Yes Bank shares, Sebi said Panchal received 150 shares each from 6,315 allotments through off-market transactions, aggregating 9,47,250 shares.

Of the 6,315 applications, as many as 6,221 have the same address as that of the sister of Roopalben Panchal, with whom the debarred entity holds joint dematerialised account.

A similar modus operandi has been adopted by Sugandh, who received 150 shares each from 1,313 demat accounts, totalling 1,97,250 shares in off-market transactions, the market regulator said.

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