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Our Bureau

Initial public offering allotment case

Mumbai , Nov. 21

The Securities and Exchange Board of India on Tuesday ordered depositories National Securities Depository Ltd (NSDL) and Central Depository Services (India) Ltd (CDSL) and eight depository participants, which were found guilty in the IPO allotment case, to pay back around Rs 116 crore, which, the regulator believes, was unjustly gained by these entities at the cost of small investors.

SEBI has calculated the amount on the basis of the number of shares allotted to these entities multiplied by the closing price of shares on the first day minus the IPO allotment price.

In what is called a "disgorgement order", the capital market regulator asked these entities to deposit the amount within six months in a separate account created in the name of SEBI.

According to SEBI, unlike damages, "disgorgement" is a method of forcing a defendant to give up the amount by which he or she was unjustly enriched. Disgorgement is intended not to impose on defendants any demand not already imposed by law, but only to deprive them of the fruit of their illegal behaviour, the order issued by the whole-time SEBI member, Mr G Anantharaman, said.

Today's order follows SEBI's interim order of April 27 this year banning several entities in the IPO manipulation case from buying and selling of securities.

The eight depository participants are: Karvy Stock Broking Ltd, HDFC Bank, Khandwala Integrated Financial Services Pvt Ltd, IDBI Bank, Jhaveri Securities Pvt Ltd, ING Vysya Bank, Pravin Ratilal Share & Stock Broking and Pratik Stock Vision.

The disgorgement amount has to be paid jointly and severally by all the entities. "The amount shall be paid in equal amounts by the respective depository and by the depository participants (in the proportion of their actual involvement) viz. 50 per cent in each class," the order said.

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More Stories on : Investor Protection | Economic Offences | Regulatory Bodies & Rulings | IPOs

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