Sebi distributes Rs 23 crore IPO scam money among investors

The Securities and Exchange Board of India (Sebi) has started disbursing around Rs 230000000 to 12.7500000 investors from the amount disgorged in the IPO scam. The first set of cheques were handed over by Finance Minister Pranab Mukherjee at a function held on the SEBI Foundation Day in New Delhi in the presence of Corporate Affairs Minister Salman Khursheed. According to Sebi,there are 83,112 investors who are eligible for a reallocation amount of Rs 20 or less. “Keeping in view the administrative costs involved,Sebi does not propose to make disbursement to such investors who are eligible for a reallocation amount of Rs 20 or less. There are about 7.9900000 investors eligible for a reallocation amount of more than Rs 20 but less than Rs 300 each. Sebi is making reallocation for the full eligible amount to all such investors amounting to a total of Rs 9.020000000. This covers 59% of all the identified investors who are eligible for receiving some reallocation,” it said. The remaining 4.7500000 investors each of who are eligible for a reallocation amount of more than Rs 300 are being paid in the first instance,a sum of Rs 300 each amounting to Rs 14.270000000. This is the first step in the reallocation process and as further disgorgement amount is realized further reallocation will be made,Sebi said. “Reallocation payment to identified investors totaling about 7.6100000,whose full details including bank MICR code were available,has been made through NECS/ECS. In about 5.1300000 cases where the bank accounts of identified investors were not found,the physical warrants are in the process of being sent. This process will be completed by April 16,2010,” Sebi said. Sebi had investigated certain irregularities in the transactions in the shares issued through 21 IPOs (initial public offers) during the period 2003-2005,before their listing on the stock exchanges. Sebi had directed several persons not to buy,sell or deal in the securities market,including in IPOs,directly or indirectly,till further directions and initiated proceedings against these person in accordance with the SEBI Act and Regulations to disgorge illegal gains and take appropriate action including penalties. “Proceedings against such persons are at various stages,” Sebi said. A committee was set up by Sebi under the chairmanship of Justice DP Wadhwa,former Judge of the Supreme Court of India to advise and recommend the procedure of identification of persons who have been deprived in these 21 IPOs and the manner in which reallocation of shares to such persons should take place. The Justice Wadhwa committee submitted its report to Sebi,concluding that reallocation in terms of shares would not be practical. It enunciated three principles for identification of deprived persons,amount and the method of reallocation — the gains associated with the number of shares allotted to applicants who had illegally cornered shares in the IPOs will be treated as unjust allotments/enrichment; the totally unsuccessful applicants will have a call on the reallocation and these applicants will be considered for the amount which is the difference of closing price of shares on the first day of listing/trading at NSE and the IPO issue price; and the totally unsuccessful applicants will be reallocated money value as computed above from recovered unjust gains,till they each receive the gains associated with minimum shares allotted to the lowest category in the IPO.