Retired Supreme Court judge is to look at the IPO scam issue

Our Bureau

ChennaiApril 30The Securities and Exchange Board of India (SEBI) has decided to form an expert committee headed by a retired Supreme Court judge to look at the issue of re-allocation of shares/money under the recent multiple application IPO scam, according to its Chairman Mr M. Damodaran.

A timeframe by when this is expected to commence is premature to discuss. Other issues, including finding out who will be given greater priority in the reallocation process - those who got lesser number of shares or those who missed out on shares - is yet to be decided. "However, we will not allow double benefit to these investors," he said at a meeting organised by the Tamil Nadu Investors Association.

`Consent orders'

This means investors would either be offered share or money as reallocation. Further, SEBI is also in the process of introducing `consent orders' to solve cases that are pending.

Under this process, thousands of cases irrespective of the type of offence will be treated alike. However, repeat offenders and serious offenders will be looked at seriously and their settlement amount would be larger. This proposal of `consent orders' is expected to settle cases and contribute to the recently announced Investor Protection and Education Fund.

"To decide on pending and future cases and whether they go for consent or not will be decided by a committee headed possibly by a retired judge," he said. The committee is expected to be formed next week.

SEBI is also in talks with the Department of Company Affairs to seek permission to regulate stock split that is below a certain price. As part of this, SEBI expect that dividend would have to be declared in absolute terms (in rupees) and not in percentage terms as it is common, he said.

(This article was published in the Business Line print edition dated May 1, 2007)
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