Subscribe
My Reads e-paper Newsletters IFSC Code Finder New
Subscribe
OPEN APP
Home >Markets >Stock Markets >Sebi penalizes Yes Bank, senior officials in AT1 bonds case

Sebi penalizes Yes Bank, senior officials in AT1 bonds case

Premium
On 13 March 2020, the government had approved a rescue plan for Yes Bank, backed by the State Bank of India (SBI).

The investigation found that Yes Bank represented the product as a ‘Super FD’ and ‘as safe as FD’, the term sheet was not shared with many investors; no confirmations taken from the investors with regard to their understanding of the features and risks associated with the bond

A Sebi adjudication order issued today imposed a fine of 25 crore on Yes Bank and fines of 50 lakh to 1 crore on senior executives of its private wealth management team. These include Vivek Kanwar who was the former head of the private wealth management team and Ashish Nasa and Jasjit Singh Banga who were senior executives in the wealth management team. Sebi imposed a fine of 1 crore on Vivek Kanwar and 50 lakh each on Ashish Nasa and Jasjit Singh Banga.

A Sebi adjudication order issued today imposed a fine of 25 crore on Yes Bank and fines of 50 lakh to 1 crore on senior executives of its private wealth management team. These include Vivek Kanwar who was the former head of the private wealth management team and Ashish Nasa and Jasjit Singh Banga who were senior executives in the wealth management team. Sebi imposed a fine of 1 crore on Vivek Kanwar and 50 lakh each on Ashish Nasa and Jasjit Singh Banga.

After Sebi received multiple complaints from investors of AT1 bonds that raised questions about selling of these instruments, it conducted an investigation in the matter to ascertain whether there was any violation of its rules. It then issued an adjudication show cause notice to Yes Bank Ltd, Rana Kapoor, Vivek Kanwar (head of private wealth management team), Ashish Nasa and Jasjit Singh Banga.

After Sebi received multiple complaints from investors of AT1 bonds that raised questions about selling of these instruments, it conducted an investigation in the matter to ascertain whether there was any violation of its rules. It then issued an adjudication show cause notice to Yes Bank Ltd, Rana Kapoor, Vivek Kanwar (head of private wealth management team), Ashish Nasa and Jasjit Singh Banga.

Subscribe to Continue Reading

“Sebi observed that the noticees had facilitated selling of AT1 bonds of Yes Bank from institutional investors to individual investors. It was alleged that during the process of selling of the AT1 bonds, individual Investors were not informed about all the risks involved in subscription of AT1 bonds," Sebi said in its order on Monday.

The investigation found that Yes Bank represented the product as a ‘Super FD’ and ‘as safe as FD’; the term sheet was not shared with many investors; no confirmations taken from the investors with regard to their understanding of the features and risks associated with the bond.

That apart, risk profiling of individual clients was not done, especially investors more than 70,80 and 90 years old. There was also a push from the chief executive of the bank to down sell the AT1 bonds which led the private wealth management team to recklessly sell the bonds to individual investors.

Meanwhile, last month, the Bombay high court has granted time to the Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) to file responses in a petition filed by individual holders of Yes Bank additional tier 1 (AT1) bonds. The bondholders, who had approached the court in February under the banner of the AT1 Bondholders Association, claim that the sale of bonds was illegal and have asked for Yes Bank to be directed to deposit 160 crore in court, pending a decision in the case.

On 13 March 2020, the government had approved a rescue plan for Yes Bank, backed by the State Bank of India (SBI). Domestic investors— SBI, Housing Development Finance Corp, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First bank—had invested 10,000 crore in Yes Bank. However, Yes Bank’s AT1 bonds worth 8,415 crore were written down in full in March last year.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!