Sebi Directs The Defreezing of Bank, Demat Accounts, MF Folios

By Consultants Review Team Wednesday, 25 October 2023

Capital markets regulator Sebi has given orders to defreeze bank accounts as well as share and mutual fund holdings of Rana Kapoor, former MD and CEO of Yes Bank. Taken in with respect to the connection with the DHFL money laundering case, Kapoor has been in jail since March 2020. 

Sebi had asked Kapoor to pay Rs 2.22 crore in a case of misselling the private sector lender’s Additional Tier-1 (AT1) bonds and also was warned of arrest and attachment of assets coupled with bank accounts if he fall short to make the payment within 15 days. The amount also included interest and recovery costs. In September 2022, Securities and Exchange Board of India (Sebi) sent the demand notice after Kapoor failed to pay the fine of Rs 2 crore imposed on him.

In the case of misselling the private sector lender’s AT1 bonds, the grant was given as an interim stay on a Sebi order. The release order came after the Securities Appellate Tribunal (SAT), through a ruling on September 12.

In addition, the appellate tribunal ordered Kapoor to deposit a sum of INR 50 lakh within six weeks. He paid the amount within the timeline in compliance with the order. The matter has been listed for a final hearing on November 20.

Sebi asked them to “release the bank account(s), locker (s), demat account (s), mutual fund folio (s) of the defaulter (Kapoor) attached given a notice issued to all banks, all mutual funds and depositories - CDSL and NSDL - on Friday. 

The case further entailed the misselling of the bank’s AT1 bonds. The allegations were put upon with respect to the bank and certain officials failing to inform investors of the risk involved while selling the AT1 bonds in the secondary market. The sale of AT1 bonds commenced in 2016 and continued till 2019.

Taking regular acknowledgment from the team and giving them further instructions to increase the sales in its order, Sebi stated that Kapoor was overseeing the wholesome operation relating to the secondary sale of AT1 bonds. This created pressure on the officials to ramp up the sales.

Further pertaining to individual investors, the regulator said that Kapoor was responsible for acts of misrepresentation or suppression of material facts, manipulation, and misselling of AT1 bonds of Yes Bank.  Sebi has also stated in its order that Kapoor pressured officials of the private wealth management team to develop a devious scheme to go away with the AT1 bonds on hapless customers of Yes Bank


Current Issue