10-year old IPO scam: SEBI to begin Fresh investigation

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NEW DELHI: Markets regulator SEBI will re-investigate a nearly 10-year-old case of alleged IPO-related irregularities by some operators as ‘inconsistencies’  have come to the fore in its earlier order.

The regulator will re-investigate the matter pertaining to Jayesh P Khandwala, proprietor of Zealous Trading Company, its role in IPOs of IDFC, Sasken and Suzlon, its alleged direct or indirect transactions, relations with other entities and the alleged gains made by him.

The matter first came to light in 2005. The Securities and Exchange Board of India (Sebi) has decided to re-investigate the matter as ‘inconsistencies’ have been found in the case.

“..it is appropriate that Sebi look into these objections/inconsistencies and relationships among various players in a fresh investigation” Sebi Whole Time Member Prashant Saran said in his order.

Earlier, Sebi had prima facie found that Khandwala had made unlawful gains in the IPO demat scam. Thousands of fictitious demat accounts were created to corner shares meant for the retail investors. The Sebi investigation into the IPO demat scam had found that Khandwala provided finance to various operators to make applications in the retail category of these initial share sale programmes.

Upon allotment of shares in these IPOs the operators subsequently transferred these shares and corresponding refunds to Khandwala who in turn disposed of the said shares and made an unlawful gain.

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