Mumbai: India’s capital market regulator Securities and Exchange Board of India (Sebi) will hold its board meeting in New Delhi on Monday to discuss the contentious orders issued by an independent committee against the country’s premier depository National Securities Depository Ltd (NSDL) in the initial public offering (IPO) scam.
The orders issued by the independent committee on 4 December have not yet been made public.
Sebi’s spokesperson declined to disclose the agenda of the meeting.
According to a person familiar with the development, the agenda of the board is to discuss the orders against NSDL as the board has certain reservations regarding them.
The IPO scam, unearthed in April 2006, involved depositories, depository participants and market operators, who allegedly used or helped some entities use 59,000 fictitious demat accounts to corner shares meant for small investors.
Contentious issue: Sebi headquarters in Mumbai. The Sebi board will take up the 4 December orders which have not yet been made public. Abhijit Bhatlekar / Mint
The Sebi-NSDL row began in April 2006 when in an ex-parte order, Sebi said the depositories “failed to exercise oversight over the depository participants” and the promoters of NSDL (and CDSL, another depository) were directed to take “all appropriate actions including revamping of management”.
Following an appeal by NSDL, this order was stayed by the Securities Appellate Tribunal (SAT), the appellate tribunal that hears appeals against orders passed by Sebi.
In November 2006, Sebi passed another order against NSDL and a few others asking them to pay a sum of Rs115.82 crore for alleged carelessness in opening of demat accounts. Of this, NSDL’s share was Rs45 crore. This led to NSDL filing an appeal with SAT.
The tribunal set aside Sebi orders in November 2007, describing its action as a clear “violation of the principles of natural justice”.
In January, SAT set aside another Sebi order that penalized NSDL and CDSL for negligence in opening demat accounts drawing, the curtains on the controversial Sebi action against the two depositories.
Sebi had in April 2007 imposed a penalty of Rs5 crore on NSDL and Rs3 crore on CDSL.