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Yes Bank and six individuals have paid Securities and Exchange Board of India (Sebi) over 1.65 crore to settle a case pertaining to alleged selective disclosure of asset quality, the market regulator said on Tuesday.

Apart from the private sector bank, Ashish Agrawal, Niranjan Banodkar, Sanjay Nambiar, Devamalya Dey, Rajat Monga and Shivanand Shettigar were part of the settlement proceedings.

The order comes after the entities approached Sebi to settle the proceedings initiated against them “without admitting or denying the findings of fact and conclusions of law", through a settlement order. The settlement amount was paid on August 27, 2021, and was duly received by SEBI, the watchdog said in its settlement order.

“In view of the acceptance of the settlement terms and the receipt of settlement amount as above by SEBI, the instant adjudication proceedings initiated against applicants vide show cause notice dated October 26, 2020 are disposed of," SEBI said in the order.

The regulator conducted an investigation in the affairs of Yes Bank during February 2019 to ascertain possible violation of provisions of Sebi Act and Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) Regulations.

“Pursuant to the investigation, Sebi observed certain violations of Section 12A(c) of the SEBI Act and Regulations 3(a), 3(d), 4(1), 4(2)(k) and 4(2)(r) of PFTUP Regulation," SEBI said.

Following this, Sebi issued show cause notices to the bank and six others on October 26, 2020.

In the show cause notice, it was alleged that Yes Bank made a selective disclosure on February 13, 2019, highlighting “nil" divergence which had significant positive impact on the price movement and had not disclosed other issues mentioned in the Risk Assessment Report (RAR) as observed by RBI such as lapses and regulatory breaches in various areas of its functioning.

It was alleged that announcement made by Yes Bank to exchanges were “incomplete as only selective disclosures highlighting nil divergence in bank's asset classification and provision from RBI norms were disclosed as per the RAR of RBI."

“However, other lapses and regulatory breaches in various areas as identified in the RAR were not disclosed [by Yes Bank]," the order noted.

SEBI said the announcement resulted in misleading the investors as the price of the scrip increased by around 30 per cent and volume of trading the scrip also increased substantially the next trading day, i.e. February 14, 2019.

It was alleged that the bank and six persons, who were involved in the decision making process to make the information public, have violated the provisions of PFUTP norms. These six individuals were either a member of the Reputational Risk Management Committee (RRMC) or part of the decision making process in relation to the disclosures made on February 13, 2019.

Pending adjudication proceedings, the applicants proposed to settle the proceedings initiated against them and filed settlement applications.        

Thereafter, Sebi's committee recommended that the case may be settled upon payment of 1.65 crore by applicants on jointly and several liability basis and accordingly they remitted the amount. The case was settled after receiving the settlement amount

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