Role of NSDL in the 2005 scam involving Initial Public Offerings<br />BY-<br />Rohit Deshmukh 2010185<br />Rohit Kumar Gar...
Agenda-<br />The Scam<br />Masterminds<br />How it was operated?<br />Motive<br />Detection of Scam<br />Major IPOs affect...
The Scam-<br />It started in August, 2004.<br />It involved manipulation of the primary market by using fictitious or bena...
Masterminds behind Scam-<br />Roopalben<br />SugandhInvestments<br />Zaveri’s<br />Budhwani’s & Sakseria’s<br />Along with...
The Game Plan-<br />Opening of thousands of benami a/c by a single person.<br />Applied for IPO’s through these accounts.<...
Motive-<br />The motive was to make windfall gains from the price difference between the IPO price and the listing price.<...
How it was detected?<br />First, The IPO scam came to light in 2005 during Yes Bank IPO (RoopalBen Case).<br />Secondly, o...
Major IPO’s affected-<br />Jet Airways<br />Suzlon Energy<br />JP Hydro Power<br />NTPC <br />PVR Cinemas <br />Etc..<br />
Banks and DPs Involved<br /><ul><li>Bharat Overseas Bank Ltd.
Indian Overseas Bank
Vijaya Bank
City Bank
HDFC Bank Ltd.
ICICI Bank Ltd.
Standard Chartered Bank
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  • Around 33 lacs were earned by her through this procedure…
  • Public Issuers. 45, Rupal sold at 61.40 and make a profit of 1.37 cr. Which triggered SEBI to probe into this matter….
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  • Sebi is set to reopen its probe into multi-crore IPO scam of 2003-2006, after more than a year of declaring as &apos;null and void&apos; the charges made by its own committee against depository NSDL and others in the matter.Sebi will discuss afresh in its next board meeting on June 30 a two-member committee&apos;s investigation report on the scam, except the part where the market regulator itself was accused of failing in its regulatory role, sources said.Still, this will be probably the first instance of Sebi revisiting an issue previously dismissed by it, as also an unprecedented case of the regulator being open to a report, where its own role has been criticised.The committee, comprising of the then Sebi board members G Mohan Gopal and V Leeladhar, was constituted in 2008 to look into NSDL&apos;s role in the IPO scam and it found various lapses on the part of the depository, as also the Sebi itself
  • Deshmukh & garg

    1. 1. Role of NSDL in the 2005 scam involving Initial Public Offerings<br />BY-<br />Rohit Deshmukh 2010185<br />Rohit Kumar Garg 2010186<br />
    2. 2. Agenda-<br />The Scam<br />Masterminds<br />How it was operated?<br />Motive<br />Detection of Scam<br />Major IPOs affected <br />Banks and DPs involved<br />Role of NSDL<br />Current Status<br />References <br />
    3. 3. The Scam-<br />It started in August, 2004.<br />It involved manipulation of the primary market by using fictitious or benami demat accounts.<br />Manipulators were syndicate of investors, DPs and Banks.<br />There were 53 IPOs 5 crore Shares, 1 Lac Bogus Demat a/c. <br />
    4. 4. Masterminds behind Scam-<br />Roopalben<br />SugandhInvestments<br />Zaveri’s<br />Budhwani’s & Sakseria’s<br />Along with the Broker-Investors, with support of Banker & DP run the ‘Show-Scam’ for 18 months.<br />
    5. 5. The Game Plan-<br />Opening of thousands of benami a/c by a single person.<br />Applied for IPO’s through these accounts.<br />Financing through illegal banks accounts.<br /> Off- Market transfer of shares to first holder account.<br />Sold on first day of listing. <br />
    6. 6. Motive-<br />The motive was to make windfall gains from the price difference between the IPO price and the listing price.<br />For eg. Himani Patel sold her shares of Suzlon for more than Rs. 839/- compared to the IPO price Rs. 510/-.<br /> Around Rs. 33,52,600/- were illegally earned by her.<br />
    7. 7. How it was detected?<br />First, The IPO scam came to light in 2005 during Yes Bank IPO (RoopalBen Case).<br />Secondly, on October, 2005 when an Income Tax raid on Purshottam Bhudwani. <br />It was found that he was controlling over 5,000 benami demat accounts. <br />
    8. 8. Major IPO’s affected-<br />Jet Airways<br />Suzlon Energy<br />JP Hydro Power<br />NTPC <br />PVR Cinemas <br />Etc..<br />
    9. 9. Banks and DPs Involved<br /><ul><li>Bharat Overseas Bank Ltd.
    10. 10. Indian Overseas Bank
    11. 11. Vijaya Bank
    12. 12. City Bank
    13. 13. HDFC Bank Ltd.
    14. 14. ICICI Bank Ltd.
    15. 15. Standard Chartered Bank
    16. 16. Karvy Registrar
    17. 17. Welvet Financial Advisors Ltd. Etc..</li></li></ul><li>Role of NSDL in IPO scam-<br />According to SEBI-<br />NSDL failed in detecting deficiencies in Karvy Operations.<br />NSDL said it was not concerned with IPO.<br />The scrutiny of IPO is done by registrar (Karvy).<br />
    18. 18. Karvy, The Culprit-<br />More than 95% bogus fictitious Demat accounts have been opened by Karvy DP.<br />Karvy has accepted payment and also refunded the amount to the scamsters <br />It is unearthed that Karvy was issuing single cheque to Panchals, Sugandh Investment for these benami, forged applications. <br />The Syndicate of Karvy, Bharat Overseas Bank, investors, Panchals was transferring refunds belonging to thousands of bogus applicants with help of Electronic Clearing System directly in the bank accounts of Panchals & Others<br />
    19. 19. Faults of NSDL-<br />It overlooked the operations of Karvy.<br />Fail to plug the loop holes related to the demat accounts. <br />There was no concept of Know Your Customer policy.<br />They were not up-to-date with their software. <br />
    20. 20. Status of IPO Scam Case-<br />Last year SEBI closed the case declaring “Null & Void” charges against NSDL.<br />Now SEBI is revisiting the case afresh to find the faults in their own system and in NSDL.<br />A committee had met on 30 June, 2011 to discuss the case.<br />
    21. 21. References- <br />http://ibnlive.in.com/news/ipo-scam-what-when-who-and-how/8980-7-single.html<br />http://www.indianexpress.com/news/sebi-to-discuss-nsdls-role-in-ipo-scam/808891/<br />

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