The Securities Appellate Tribunal deferred hearing of National Securities Depository Ltd's (NSDL) appeal against market regulator SEBI's order in the IPO case to November 17.

NSDL had appealed in mid-September 2011 against an order pronounced by a two-member SEBI committee consisting of Dr G.Mohan Gopal and Mr V Leeladhar that was reinstated by SEBI on July 28. The committee had to be created as the then SEBI Chairman, Mr C B Bhave, was heading NSDL during 2003-2005 at the time of the IPO scam that was being investigated by SEBI.

In the scam, a few people cornered IPO shares meant for retail investors during the period 2003-2005. Approximately 60,000 benami demat accounts were used to corner shares in more than 20 IPOs during this period.

The SEBI committee's order directed NSDL to conduct an independent enquiry and find out those NSDL employees who failed to discharge their duties/responsibilities.

The order also directed NSDL to conduct an independent audit of all its processes to ensure the integrity of the overall depository system and report to SEBI within nine months.

The committee also found SEBI guilty of not being proactive as a regulator. It recommended that SEBI issue a code of conduct for depositories. SEBI was also directed to check the efficacy of the depository system through independent experts and take remedial action.

However, SEBI in February 2010, declared the order of the two member committee as null and void, and found NSDL not guilty in the IPO scam.

On receiving a petition by an NGO Manav Adhikar, the Supreme Court asked SEBI to reconsider its decision to exonerate NSDL.

This prompted the regulator to reinstate the order of the two member committee.

Related Topics
comment COMMENT NOW