Financial Daily from THE HINDU group of publications
Wednesday, Dec 28, 2005
Financial Daily from THE HINDU group of publications Wednesday, Dec 28, 2005 |
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Economic Offences Money & Banking - Private Banks Markets - Regulatory Bodies & Rulings YES Bank IPO: NSDL cries foul over blame pinned on it — Says regulation is SEBI's job Our Bureau
Mumbai , Dec. 27 THE country's premier depository National Securities Depository Ltd (NSDL) has said SEBI has not followed the "principles of natural justice" while blaming NSDL on the YES Bank IPO scam .
"In this case (YES Bank IPO case), NSDL has not been heard at all before passing any orders. Nor has SEBI given any documents or evidence to NSDL which form the basis of SEBI's conclusion regarding NSDL," it said in a letter addressed to Mr G Anantharaman, Whole-Time Member, SEBI, who passed the order on the IPO scam. In a detailed "objections" to the SEBI's order , NSDL has put the ball back in the regulator's court by saying that the matter concerning the "important regulation" on market manipulation was entirely "within the jurisdiction of SEBI". The letter notes, `As far as market manipulation is concerned, the SEBI has very rightly not assigned any supervisory role or cast any obligation on NSDL for administering the provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. Therefore, NSDL is not concerned with this very important regulation. It is entirely within the jurisdiction of SEBI.' "As the order has been passed against NSDL without following the principles of natural justice, without giving NSDL the material and documents which SEBI seeks to rely on, the order suffers from grave legal defects," the NSDL letter said. "You have given an opportunity to those persons against whom you have issued directions to file objections within 15 days from the date of this order and avail of an opportunity of personal hearing at SEBI, if so desirous," the letter said further. In its order on YES Bank IPO, the SEBI had said: "It is matter of concern that NSDL, which is a self-regulatory organisation and within whose regulatory domain Karvy-DP falls, could not detect in advance the apparently systemic deficiencies in Karvy-DP". In its order earlier this month SEBI had said that a couple of investors "had abused" the system by creating over 7,500 "fictitious" dematerialised accounts at NSDL through Karvy-DP to apply for the retail portion of Yes Bank's IPO. On the IPO applications in fictitious names, the letter said "NSDL is not concerned in any manner with this activity as applications of investors to an IPO are forwarded to the Registrar to an Issue. Scrutiny of applications is done by the Registrar to an issue... .NSDL has no role to play when applications for an IPO are made," the letter said. However, regarding the role of Karvy-DP, NSDL said it was examining the various issues arising from the know-your client norms done by Karvy-DP. "As soon as the issues are examined, we will send the report to SEBI." "I don't want to comment anything more than what is written in the letter," Mr C.B. Bhave, Managing Director, NSDL, told Business Line, when contacted.
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