The document summarizes an IPO scam that occurred in India between 2003-2005. Financiers and market players manipulated the primary market for initial public offerings by using thousands of fake demat accounts to procure shares in IPOs for Yes Bank and IDFC Bank. One person opened over 6,000 fake accounts for Yes Bank shares and over 27,000 fake accounts for IDFC Bank shares using common addresses. When the shares were allotted, they were transferred to financiers who then sold them on the first day of listing at profits from the price difference. The scam came to light in 2005 during Yes Bank's IPO and the SEBI investigation covered 105 IPOs from 2003-2005.
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The document summarizes an IPO scam that occurred in India between 2003-2005. Financiers and market players manipulated the primary market for initial public offerings by using thousands of fake demat accounts to procure shares in IPOs for Yes Bank and IDFC Bank. One person opened over 6,000 fake accounts for Yes Bank shares and over 27,000 fake accounts for IDFC Bank shares using common addresses. When the shares were allotted, they were transferred to financiers who then sold them on the first day of listing at profits from the price difference. The scam came to light in 2005 during Yes Bank's IPO and the SEBI investigation covered 105 IPOs from 2003-2005.
The document summarizes an IPO scam that occurred in India between 2003-2005. Financiers and market players manipulated the primary market for initial public offerings by using thousands of fake demat accounts to procure shares in IPOs for Yes Bank and IDFC Bank. One person opened over 6,000 fake accounts for Yes Bank shares and over 27,000 fake accounts for IDFC Bank shares using common addresses. When the shares were allotted, they were transferred to financiers who then sold them on the first day of listing at profits from the price difference. The scam came to light in 2005 during Yes Bank's IPO and the SEBI investigation covered 105 IPOs from 2003-2005.
Copyright:
Attribution Non-Commercial (BY-NC)
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Download as DOCX, PDF, TXT or read online from Scribd
The document summarizes an IPO scam that occurred in India between 2003-2005. Financiers and market players manipulated the primary market for initial public offerings by using thousands of fake demat accounts to procure shares in IPOs for Yes Bank and IDFC Bank. One person opened over 6,000 fake accounts for Yes Bank shares and over 27,000 fake accounts for IDFC Bank shares using common addresses. When the shares were allotted, they were transferred to financiers who then sold them on the first day of listing at profits from the price difference. The scam came to light in 2005 during Yes Bank's IPO and the SEBI investigation covered 105 IPOs from 2003-2005.
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THE IPO SCAM 2005/2006
When the Securities Exchange Board of India (Sebi) started scanning an entire spectrum of IPOs launched over 2003, 2004 and 2005, it ended digging up more dirt and probably prevented a larger conspiracy to hijack the market. Here is a lowdown on the IPO scam: What is the scam? It involved manipulation of the primary marketread initial public offers (IPOs)by financiers and market players by using fictitious or benaami demat accounts. While investigating the Yes Bank scam, Sebi found that there were 6,315 fictitious demat accounts opened for procurement of Yes Bank shares out of which 6,221 had the name address of 402-403 Shashwat Building, Opposite Gujarat College, Ahmedabad. In the IDFC bank, there were 27,064 fake bank accounts out of which 4,990 had the address of 406 Shashwat Building, 4,971 had common address of 403-Shashwat Building and 4,946 had an address of 307-Shashwat Building. A unique modus operandi was used in the IPO scam in IDFC and Yes Bank in which an accused came out with an advertisement in local dailies asking public to click a photograph and also get two copies free of cost. The advertisement put out by Roopalben Nareshbhai Panchal of IndiaBulls Securities, one of the main accused in the IPO scam in IDFC and Yes Bank, saw a large number of people gathering to avail this free service, but least did they know what the photographs would be used for. Once the allotment was made, the shares were transferred to Panchals account, who in turn passed them to financers. These financers offloaded the shares on the opening day of the listing of shares in the stock market and made illegal gains as list price was higher then allotment price. When was the scam detected? The IPO scam came to light in 2005 when the private Yes Bank launched its initial public offering. Roopalben Panchal, a resident of
Ahmedabad, had allegedly opened several fake demat accounts and subsequently raised finances on the shares allotted to her through Bharat Overseas Bank branches. The Sebi started a broad investigation into IPO allotments after it detected irregularities in the buying of shares of YES Banks IPO in 2005. What triggered the Sebi probe? On October 10 last year, an Income Tax raid on businessman Purushottam Budhwani accidentally found he was controlling over 5,000 demat accounts. Sebi finds this suspicious. On December 15, Sebi declared results of its probe, how a few people cornered a large chunk of YES Bank IPO shares. On January 11 this year, Sebi discovered huge rigging in the IDFC IPO. Roopalben Panchal was found to be controlling nearly 15,000 demat accounts. It was found that once they obtained these shares, the fictitious investors transferred them to financiers. The financiers then sold these shares on the first day of listing, reaping huge profits between the IPO price and the listing price. The Sebi report covered 105 IPOs from 2003-2005.
