SEBI bars 24 operators

Citing the need to "protect the market, particulary the IPOs, from being preyed on by predatory manipulators", the Securities and Exchange Board of India (SEBI) on Thursday directed Karvy DP and Pratik DP not to carry on activities of depository participants (DP) till the completion of enquiry and passing of final order in the initial public offer (IPO) scam. "In view of the detailed findings against Karvy DP and Pratik DP in this order, Karvy DP and Pratik DP in my view, prima facie do not appear to be fit to deal in securities market as SEBI registered intermediaries," stated G. Anantharaman, whole-time member, SEBI, in his interim order in the case of Yes Bank and IDFC IPOs. SEBI also debarred 24 master account holders and 85 financiers from dealing in the capital market. The board's interim order said that action was being taken in view of the need to "reckon with the present booming market". Other 12 DPs, including HDFC Bank, Centurion Bank of Punjab, Motilal Oswal Securities, ILand FS, IDBI Bank and ING Vysya Bank were directed not to open fresh demat accounts till further directions. NSDL was directed to conduct inspection in the case of 15 DPs including ICICI Bank, Citibank and Standard Chartered Bank. The SEBI order alleged that it appeared that some of the DPs named in the order were also acting as brokers. It advised stock exchanges to examine the role of brokers/sub-brokers by way of participation in IPOs either directly or indirectly and their dealings in the shares subsequent to listing and submit a report within a month. SEBI conducted investigations in respect of IPOs during the period from January 2003 to December 2005. It came to the notice of SEBI that certain entities had cornered IPO shares reserved for retail applicants by making applications in the retail category through the medium of000 of beneficiary accounts in the name of fictitious entities with each of the application being of small value so as to eligible allotment under the retail category. After the allotment, these fictitious allottees transferred these shares to their principals who inturn transferred the shares to their financiers. Most of these shares were sold immediately on listing.