IPO scam: CBI raids investors, Karvy

A central Bureau of Investigation (CBI) team today raided 27 places of officials and investors involved in the initial public offering (IPO) scam in Mumbai, Delhi, Ahmedabad and Hyderabad, including the houses of prime accused Roopalben Panchal. The CBI also raided the premises of Karvy Consultancy at Abhijeet and Kamdhenu Building in the Ahmedabad city and carried out searches at Bharat Overseas Bank. The CBI team has seized a number of incriminating documents from the places of alleged kingpins of the scam — Roopalben Panchal, Dipak Panchal and Dhiren Vora, among others. Confirming that the raids and searches are being carried out in Ahmedabad, Rahul Sharma, head of Gujarat state, CBI, said, ‘‘Teams of Economic Offences Wing of CBI raided various places in Ahmedabad today’’. However, he declined to give information saying the searches were carried out by Delhi and Mumbai CBI teams. ‘‘The searches were carried out following a case registered by the Banking Securities and Fraud Cell (BSand FC) of the CBI in the wake of complaint filed by the Securities and Exchange Board of India (Sebi). Examination of papers is being conducted at 15 places in Ahmedabad,’’ CBI sources said. As per the CBI initial investigations, it is estimated that certain individuals and entities, conniving with certain bank officials, made an illegal profit of around Rs 320000000 after cornering large number of shares meant for retail investors in the IPOs of Yes Bank Limited (YBL) and Infrastructure Development Finance Company Limited (IDFC). There were two main intermediaries who carried out the fraud (Panchal and another group of individuals as Directors of Sugandh Estates and Investment Private Limited , says CBI. Both opened fictitious bank and demat accounts, mainly in Bharat Overseas Bank, Ahmedabad, Worli and Goregaon branch in Mumbai, and Ahmedabad’s Vijaya Bank. CBI says it has evidence that one financer has given almost Rs 300000000 to Panchal for investing in IPOs while another financer invested Rs 210000000 in these IPOs. Two cases were registered against Panchal, her brother-in-law Deepak Panchal, Directors of Sugandh Estates and Investments and some officials of Bharat Overseas Bank and Vijaya Bank. The searches have also yielded about Rs one0000000 in cash and substantial investment by these investors in other assets, CBI says. The CBI investigation was on to examine whether there was a systemic failure on part of the lead managers. The agency alleged that Karvy-DP, which was the lead manager in Yes Bank scam had not adhered to ‘‘know-your-client’’ norms. Reacting to the raids, Kirit Somaiya, former MP and president, Investors’ Grievances Forum, said there was a need to appoint a task force to handle the biggest IPO scam of India. Panchal misused pictures NEW DELHI A unique modus operandi was used to corner shares in IDFC and Yes Bank in which, Roopalben Panchal, one of the main accused, came out with an advertisement in local dailies asking public to click a photograph and also get two copies free of cost. The advertisment saw a large number of people gathering to avail this free service, but least did they know what the photographs would be used for. According to the CBI, the accused used to click photographs and keep one copy for opening fictitious bank and demat accounts. The modus operandi of Panchal was to obtain photographs of large number of people and once they were available, fictitious names along with these snaps were used to open fictitious bank and demat accounts. Then an application was made for allotment of these shares to the account holders. Once the allotment was made, the shares were transferred to Panchal’s account, who in turn passed them to financers.