Sebi settles 2 more IPO scam cases via consent order route

It may be the end for a three-year long investigation into the IPO scam that had rocked India’s capital markets in April 2006 as the Securities and Exchange Board of India (Sebi) has settled two more high-profile cases through the consent order route.

The scam involved tens of thousands of benami demat accounts with common addresses that cornered company shares set aside for small investors in IPOs. In April 2006, Sebi had passed an ex parte order, directing HDFC Bank, a Sebi-registered depository participant (DP), not to open fresh demat accounts till further orders, which was revoked in November 2006. Sebi had also initiated enquiry proceedings against the bank. However, subsequently, HDFC Bank proposed settlement of the pending proceedings through a consent order. Accordingly, Sebi settled the case, directing the bank to pay Rs 1 lakh towards settlement charges.

Similarly, Sebi has also directed Jhaveri Securities, stockbroker and DP, to pay up Rs 1 lakh towards settlement charges in another consent order. Sources said Sebi is in the process of settling most of the cases through the consent order route. In fact, it has so far settled close to 30 cases relating to the scam through consent orders.