IPO scam: Retail investors may be compensated
Mumbai: IPOs of companies like TCS, NTPC and Jet Airways were rigged and scamsters gained close to Rs 100 crore between 2003-05, market regulator Sebi-appointed panel has said.
The panel headed by retired Supreme Court judge Justice D P Wadhwa also recommended that the money be recovered from theculprits and distributed among retail investors. If implemented, it would create history in terms of compensating investors who lost out on share allotment.
According to the Wadhwa Committee report, scamsters gained Rs 95.69 crore and suggested that the money could be recovered from their frozen demat accounts, which hold Rs 147.85 crore worth of shares and Rs 1.2 crore in the bank accounts frozen by CBI.
The committee was set up by regulator Sebi to probe irregularities in IPOs floated during 2003-2005 including those of Tata Consultancy Services, Jet Airways, Suzlon Energy, NTPC, Yes Bank and Shoppers Stop.
The preference will be given to those retail applicants who did not get any share because of cornering of shares by scamsters who created fictitious demat accounts. Investors who got a few shares will also be eligible for compensation, the report suggested.
If recommendations are accepted, Prithvi Haldea of Prime Database said, "This will be a landmark judgement because this is for the first time in the history of Indian capital market, the losing investor will be compensated for their losses."
The scam in 21 IPOs, which were investigated, related to alleged cornering of shares reserved for retail investors by scamsters through opening of fictitious accounts.
The committee said for the purpose of payment to the deprived retail applicants, the amount which is the difference of closing price of shares on the first day of listing/trading at NSE and the IPO issue price will be considered.
"These applicants will not be entitled for the market price movements subsequent to the listing," said the committee headed by former Supreme Court judge D P Wadhwa.
It recommended that those who did not get any shares should be reallocated money equally from the recovered amount, till they each receive the gains from minimum shares allotted to the lowest category in the IPO.
Once that number is reached, any left-over money shall "spill over" and would be reallocated to the partly successful applicants, the committee added.
"This would help bring back investors` confidence. He would know that if he is cheated, the fraudsters are not only punished but his loss is also compensated," Haldea said.
Unlike the IPO demat scam case, where identifying the victims is relatively easy, there are numerous frauds where fraudsters, if caught, get punished but the deprived lot is not compensated as they are difficult to identify, he said.
Former Finance Minister P Chidambaram had assured Lok Sabha that steps would be taken to reallocate shares to people who had lost out on allocation of shares on account of the IPO scam.
More from India
More from World
More from Sports
More from Entertaiment
- I eat beef, can somebody stop me?: Kiren Rijiju hits back at Naqvi
- Delhi: Visually impaired boy scores 91.4% in CBSE 12th Board exams
- MP: 14-year-old boy works as bonded labour since 2009
- UP: Man chops off wife's nose, hair for dowry
- Zee Media Exclusive: The plight of yoga expert Tejaswi Sharma
- Heat ave continues in India, death toll climbs to over 1,400
- Woman denied flat in Mumbai for being a Muslim
- 4 Indians in Forbes' 100 most powerful women list
- Megastar Amitabh Bachchan slapped with Rs 1 crore notice
- Gujjar stir: HC asks Rajasthan govt to clear rail track, roads
- Kenyan lawyer offers to marry Barack Obama's daughter Malia
- Gujjar stir: HC asks Rajasthan govt to clear rail track, roads- Part II
- Maggi likely to face ban in India!
- AIB: The 'Third Gender's right to dignity'
- Salman Khan accident files burnt in Mantralaya fire
- CBSE Class 10 Board Result 2015 to be announced today
- Check mahresult.nic.in for MSBSHSE Maharashtra Class 12 HSC Result 2015
- CBSE Class 10 Board Result 2015 (cbse.nic.in, cbseresults.nic.in) postponed?
- Maharashtra MSBSHSE HSC Result 2015 on mahresult.nic.in
- I was misquoted, says Kiren Rijiju on 'beef' remark
- First look: Salman Khan steals thunder in `Bajrangi Bhaijaan`
- Check cbse.nic.in, cbseresults.nic.in for CBSE Class 10 Result 2015
- mahresult.nic.in updated with MSBSHSE Maharashtra HSC Class XII Result 2015
- CBSE Class 10 (Class X Board) Result 2015 on cbse.nic.in, cbseresults.nic.in at 2 pm
- Manmohan Singh defends himself on 2G charge, slams Modi govt for 'carbon copy' schemes
- Sonia Gandhi 'unconstitutional authority' during UPA: PM Narendra Modi
- Hours after attacking NDA govt, Manmohan Singh meets PM Narendra Modi
- Reservation stir: Five percent job quota to Gujjars unlikely, hints Rajasthan govt
- PMO website revamped, now send e-mail to PM Modi directly
- Death toll climbs to over 1400 as intense heatwave continues in India