Sebi to reconsider clean chit to NSDL in IPO scam

Market regulator Sebi today informed the Supreme Court that its board has decided to reconsider its earlier clean chit to depository NSDL in the years-old IPO scam.

Replying to a notice from the apex court, Attorney General Goolam E Vahanvati today informed that the market regulator's board decided in a meeting held on April 26 to reconsider a special committee's report, which had found NSDL to be at fault in the IPO scam.

Sebi said its board has decided to reconsider the report submitted by the committee with a view to accept it.

The board had given a clean chit to NSDL in the issue, despite a special committee to probe the matter finding the depository to be at fault in the case.

The bench comprising justices R V Raveendran and A K Patnaik directed to list the case in July, saying that it would see the outcome of the Sebi decision.

Sebi in its affidavit said "the board of Sebi pursuant to the (Supreme Court) Order of March 28, 2011, had reconsidered the order of the Special Committee dated December 4, 2008, at its meeting held on April 26, 2011."

"After detailed deliberations and keeping in view the spirit of the observations of the SC, the board decided to reconsider the decision... It would reconsider the report of the Committee with a view to accepting the same," it said in its affidavit.

The Sebi board meeting on April 26 was called exclusively to finalise its reply to a notice from the apex court.

The Supreme Court on March 28 had asked Sebi to reply on whether it would revisit its decision to give a clean chit to NSDL (National Securities Depository Ltd) in a major scam related to share allotment irregularities in various initial public offers (IPOs) during 2003-2006 period.

The court had asked Sebi's board to pass an appropriate resolution and place the same before the court.

NSDL was given a clean chit last year by Sebi, when its chairman was C B Bhave, who earlier headed NSDL.

Bhave had recused himself from Sebi board meeting in February 2010, when NSDL matter was discussed, as he had previously been head of the depository.

Sebi's board had given NSDL the clean chit after setting aside the order of the special committee, which had found NSDL to be at fault in the matter.

The issue reached Supreme Court after a special leave petition was filed in the apex court in this regard.

The leading national depository, which enables holding of shares and other securities in demat or electronic format, came under the scanner in 2006 after a probe into IPO scam.