The Securities Appellate Tribunal (SAT) has granted an interim stay on a penalty of ₹25 crore imposed by market regulator SEBI on YES Bank and three of its executives in the AT-1 Bond matter.

SEBI in its order on April 12 had penalised YES Bank and its executives for allegedly not informing investors of the risk factors while facilitating the sale of AT-1 bonds.

Risk factors known: SAT

“We prima facie find that the risk factor was already existing on the website, and it was in the knowledge of everyone. Considering the aforesaid, prima facie a case is made out for grant of an interim order,” SAT said.

SEBI said it had received multiple complaints from investors of AT-1 bonds, which raised the concern of mis-selling of the bonds. It conducted an investigation and imposed the penalty.

“Prima facie, the question as to whether the buyers were informed of the risk factor with regard to the AT-1 bonds can be best explained by the relationship managers who were part of the investigation but were not noticed in these proceedings,” SAT said in its order.

According to SEBI, its investigations found that YES Bank represented the product as a ‘Super FD’ and ‘as safe as FD’; the term sheet was not shared with many investors and no confirmation was taken from the investors with regard to their understanding of the features and risks associated with the bond.

Also, YES Bank’s former head of private wealth management team, Vivek Kanwar, was fined ₹1 crore, and two other former executives, Ashish Nasa and Jasjit Singh Banga, were fined ₹50 lakh each by the markets regulator.

SAT has asked SEBI to file a reply within four weeks from the date of the order. The matter is to be listed for admission and for final disposal on July 30.

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